| Serial No. | Date | Brief Description | |-----------|----------|-----------------------------------------------------------------------------------| | 1 | 17.1.89 | GREEN PAPERS ON THE LEGAL PROFESSION\
Memorandum by the Lord Chancellor | | 2 | 24.1.89 | DRAFT WHITE PAPER ON THE REFORM OF\
THE NATIONAL HEALTH SERVICE\
Note by the Secretary of the Cabinet | | 3 | 14.2.89 | ECONOMIC STRATEGY\
Memorandum by the Chancellor of the Exchequer | | 4 | 15.2.89 | REVIEW BODY REPORTS 1989\
Note by the Secretary of the Cabinet | | 5 | 7.3.89 | THE LEGISLATIVE PROGRAMME 1989–90\
Memorandum by the Lord President | Most colleagues will already know that I am proposing to publish three Green Papers on 25 January 1989 covering the work and organisation of the legal profession, conveyancing by authorised practitioners and contingency fees. Copies of the proposed Green Papers are attached. These Papers are the fruits of my paper to colleagues on competition in the legal profession (E(CP)(88) 1) which was endorsed by the Ministerial Steering Committee on Economic Strategy Sub-Committee on Competition Policy (E(CP)) on 5 October 1988 (E(CP) 88 4th meeting). That paper flowed from my disappointment with the report of Lady Marre's committee ("A Time for Change" - Report of the Committee on the Future of the Legal Profession presented to the General Council of the Bar and the Council of the Law Society, July 1988). That report failed to address the fundamental issues about organisation and structure facing the profession.

THE WORK AND ORGANISATION OF THE LEGAL PROFESSION

2. I have tried in my proposed main Green Paper (The Work and Organisation of the Legal Profession) to examine the structure and practices of the profession from first principles. The Paper states that our overall objective is to see that the public has the best possible access to legal services and that those services are of the right quality for the particular needs of the client. It sets competition and the maintenance of standards as its twin approaches to achieving this objective. It therefore promotes the removal of restrictions on competition, where these serve no useful purpose, while seeking to ensure that there are safeguards, which are sufficient by no means, to maintain the standards of conduct and the integrity of the legal profession. The Paper then seeks to draw out the structure which is best suited to give effect to these principles, against the background of the various needs of the public for legal services today.

3. The Paper accordingly sets out possible new arrangements for legal education and for the maintenance of professional standards. Since I regard education, qualifications, training and standards as the key areas in ensuring the legal profession is best structured to meet the needs of the public. The Paper proposes new arrangements in respect of advocacy, which should ensure that all those, but only those, who are properly trained, suitably experienced and subject to codes of conduct which maintain standards, will have rights of audience. There are several consequential proposals, particularly in respect of access to counsel, the appointment of Queen's Counsel, and appointments to the judiciary; and the Paper goes on to highlight a number of issues relating to the internal organisation of barristers' and solicitors' practices which I believe would benefit from a thorough examination. The Paper also proposes the abolition of the monopoly currently enjoyed by solicitors on carrying out non-contentious probate work for reward.

CONVEYANCING BY AUTHORISED PRACTITIONERS

4. There are two supporting Green Papers. The Paper on conveyancing by authorised practitioners proposes a new and less cumbersome system for permitting conveyancing by institutions than that contained in schedule 21 to the Building Societies Act 1986, while also seeking to reassure the public that the Government remains committed to the availability of a country-wide network of local legal service providers. Institutional conveyancers will be required to follow and enforce a strict code of conduct, but will also be able to use their own employed solicitors or licensed conveyancers to offer conveyancing services to the public, including their own customers.

CONTINGENCY FEES

5. The Paper on contingency fees rehearses the arguments for and against the introduction of contingency fees, especially in the light of the mixed experience of contingency fees in the United States. The Paper concludes that it would be appropriate to introduce into England and Wales speculative actions on the model which already exists in Scotland; and suggests that this might be coupled with the ability to agree an uplift on the costs, payable to the lawyer only in the event of success. The Paper, however, only seeks views on whether it would be appropriate to go beyond this and introduce contingency fees linked to the amount of the damages awarded, even if controls were placed on the extent to which contingency fees could be used.

TIMETABLE

6. The Papers have been drafted with the help of an inter-departmental working party chaired by one of my officials; and I have had the benefit of colleagues' comments on the drafts. I have prepared the Papers with early action in mind. I propose a three month consultation period after publication which will last to the end of April this year. This is a short, but in my view sufficient, period. It should allow us just sufficient time to take firm decisions in the light of responses to the Green Papers and to announce those decisions in the form of a statement to both Houses of Parliament before the summer recess this year. Changes on the lines envisaged in the Green Papers will require primary legislation. If we follow the timetable I have set out, the necessary legislative provisions could be included in the Courts and Legal Services Bill I am proposing for the 1989-90 Parliamentary session. CONCLUSION

I accordingly invite colleagues to agree to the publication of the three Green Papers with the intention that we should reach firm decisions on the proposals set out in these Papers before the summer recess this year. If colleagues agree to this approach, I propose that these Papers should be published by way of a response to a written PQ on Wednesday 25 January 1989.

J M

Lord Chancellor's Department

17 January 1989 Contingency fees

Contents

Chapter 1. Introduction

Chapter 2. Background

The position in England and Wales The position in Scotland The position in the United States of America

Chapter 3. Arguments for and against the introduction of contingency fees

The risk of a conflict of interest Protection by professional codes of conduct The United States experience Levels of damages The rule that costs follow the event Other factors in the US system Volume of litigation Access to justice Allowing the consumer to choose Product liability Summary

Chapter 4. How a system of contingency fees might operate

A speculative basis A restricted contingency basis An unrestricted contingency basis CONFIDENTIAL

Legal aid The judges The costs rule Which proceedings

Chapter 5. Conclusion CHAPTER 1 - INTRODUCTION

1.1 A contingency fee arrangement is one whereby a lawyer agrees that he will accept his client's case on the basis that he receives no payment if the case is lost, but that if it is won, he will be paid some percentage or share of the award made by the court. Such agreements are unenforceable in England and Wales and solicitors and barristers are prohibited by their respective professional codes of conduct from entering into them. In Scotland, solicitors may agree to conduct litigation on a 'speculative' basis, that is, they will receive their normal taxed costs if the case is won, but nothing if it is lost. Contingency fees are, however, allowed in many of the jurisdictions of the United States of America, where the payment made to the lawyer often relates to the amount of damages recovered by the client.

1.2 The use of contingency fees in England and Wales has always previously been resisted. The main arguments against their use are that:-

(a) they may result in a conflict of interest between lawyer and client. The lawyer will have a direct financial interest in the outcome of the case and will be unable to give the client impartial advice. This may lead to:-

(1) the lawyer being tempted to encourage the client to settle early to avoid the effort involved in fighting the case; (ii) the lawyer concentrating on cases with a high nuisance value where the defendant is more likely to be forced into making an offer to settle; and

(iii) the lawyer being tempted to try to enhance his client's chances of success, perhaps by coaching witnesses or withholding inconvenient evidence; and

(b) experience in the USA suggests that contingency fees:-

(i) encourage juries to award excessively high damages; and

(ii) encourage litigants to proceed with cases with very little merit, leading to an explosion of litigation.

1.3 Proponents of the introduction of contingency fees discount these arguments. They point out that the dangers of a conflict of interest may be guarded against by proper codes of conduct and through restrictions on the amount a lawyer is able to recover. They also note that what are considered to be the undesirable elements of the US system go wider than contingency fees and have their roots in some fundamental differences between the jurisdictions in the US and that in England and Wales. These differences are explored more fully in paras 3.5 to 3.10 below.

1.4 Current Government policy is, moreover, in favour of deregulation. This entails the removal of restrictions and the consequent widening of choice for those providing a service and for the consumer, unless there are clear public interest reasons to the contrary. The Government also believes that the onus should be on those who want to maintain a restriction to justify it.

1.5 The arguments in favour of the introduction of contingency fees are that:-

(a) they would give individuals and organisations who do not qualify for legal aid, but who cannot support expensive litigation, the opportunity of bringing their claims to court;

(b) they would encourage a greater level of commitment on the part of the lawyer; and

(c) they would encourage competition between lawyers, as clients would be able to shop around between solicitors to seek the most advantageous agreement.

1.6 The Royal Commission on Legal Services(^1) (Benson) considered whether contingency fees should be allowed in England and Wales, but concluded that any change in the law which gave lawyers a direct financial interest in the outcome of a case was not in the public interest on the grounds that it would endanger the independence of the legal profession. The Royal Commission believed that the system would not work well here and would give rise to serious dissatisfaction. It would benefit only a limited class of litigants and would reward some lawyers disproportionately. The Royal Commission on Legal Services in Scotland(^2) (Hughes) also concluded

(^1)1979 Cmnd 7648 (^2)1980 Cmnd 7846 that contingency fees should not be introduced in Scotland. They were particularly concerned about the risk that a conflict of interest might arise between a solicitor and his client where there was an agreement to act on a contingency basis.

1.7 More recently, however, both the Civil Justice Review(^3) and the Marre Report(^4) have recommended that the possibility of allowing contingency fee arrangements between lawyers and their clients should be re-examined. In suggesting that the prohibition on contingency fees should be open to re-examination the Civil Justice Review pointed out that there have been major advances in regulation policy, and that it could be argued that the risks arising out of a contingency fee system could be controlled by specific regulations rather than a general ban.

1.8 It is against this background that the Government has concluded that further consideration should be given to the question whether existing bars to the use of contingency fees should be lifted. This paper explores the issues and examines possible mechanisms for the control of contingency fees and the scope for change.

1.9 The Government would welcome comments on the issues raised in this paper by 2 May 1989. Submissions should be addressed to:

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(^3) Report of the Review Body on Civil Justice 1988 Cm 394

(^4) "A Time for Change" - Report of the Committee on the Future of the Legal Profession presented to the General Council of the Bar and the Council of the Law Society, July 1988 (Marre). CONFIDENTIAL

Room 412 Lord Chancellor's Department Trevelyan House 30 Great Peter Street London SW1P 2BY CHAPTER 2 - BACKGROUND

The position in England and Wales

2.1 Contingency fee arrangements have always been unenforceable at common law in England and Wales.

2.2 Maintenance (the giving of assistance, encouragement or support to litigation by a person who has no legitimate interest in the litigation nor any motive recognised by the court as justifying the interference) and champerty (the maintenance of an action in consideration of a promise to give the maintainer a share in the proceeds or subject matter of the action) were long prohibited at common law. It was considered to be against public policy that litigation should be promoted and supported by those with no interest in it. Blackstone's Commentaries record that "This is an offence against public justice, as it keeps alive strife and contention, and perverts the remedial process of law into an engine of oppression."¹

2.3 The Criminal Law Act 1967 abolished the old common law offences of maintenance and champerty. Section 14(2) of the same Act provides, however, that abolition of the common law offences shall not affect any rule as to the cases in which a contract is to be treated as contrary to public policy or otherwise illegal. Agreements to maintain an action therefore remain unenforceable today.

¹ Blackstone's Commentaries on the Law of England (1897) S.12 Agreements to act on a contingency basis are also restricted by section 59 of the Solicitors Act 1974. They are proscribed completely in respect of proceedings in England and Wales by rule 8 of the Solicitors Practice Rules 1988. This provides that:

"(1) A solicitor who is retained or employed to prosecute any action, suit or other contentious proceeding shall not enter into any arrangement to receive a contingency fee in respect of that proceeding.

(2) Paragraph (1) of this Rule shall not apply to an arrangement in respect of an action, suit or other contentious proceeding in any country other than England or Wales when such arrangement is made between a solicitor and a person entitled to practice as a lawyer in that other country in respect of that proceeding."

The position in Scotland

In Scotland there is a long tradition of the lawyer acting on a speculative basis. The speculative action is usually an action for damages for personal injury. Solicitor and advocate undertake to act for the pursuer on the basis that they will not be remunerated except in the event of success and that any costs such as court fees will be defrayed by the solicitor. The courts in Scotland have long recognised that this is a perfectly legitimate basis on which to carry on litigation and that it is a reasonable way of enabling people who do not qualify for legal aid to finance costly litigation: X Insurance Co v A and B 1936 SC 239. Undertaking to act on a speculative basis imposes on both advocate and solicitor special duties to satisfy themselves that there is a reasonable prospect of success. If a solicitor wishes to instruct an advocate on a speculative basis he must state the fact explicitly in his instructions and the advocate is not bound to accept.

2.6 In the event of the case being successful the solicitor and advocate are paid their normal fee. If the case is lost they are paid nothing. Traditionally the speculative action is useful to pursuers who have a reasonable case, but who are not eligible for legal aid on financial grounds, such as small businesses. At a time when the arguments in favour of contingency fees as such were firmly rejected, the Royal Commission on Legal Services in Scotland recognized that the speculative action played an important role in Scottish law. The view was, however, taken that small businesses ought properly to obtain insurance to cover their needs as potential litigants.

2.7 An important feature of this system is that it offers no protection to the pursuer against the award of expenses in the event of an unsuccessful outcome. The rule that costs follow the event is thus not affected by a scheme such as the speculative action. The unsuccessful pursuer remains liable for the costs of his successful opponent.

The position in the United States of America

2.8 When the subject of contingency fees proper is discussed the first point of reference is invariably the USA, where the Supreme Court has recognised the validity of contingency fee contracts since 1850. There is, however, a variety of schemes operating within the 50 states. Each state has its own individual practice and its own controls on contingency fee agreements between lawyers and clients. The State of Maine, for example, prohibits contingency fees entirely. In New York, Michigan and Delaware, statute has overruled initial restrictions. Contingency fees are not prohibited in New Jersey, Alabama, Ohio and California, but they are subject to limitations and controls.

2.9 Contingency fees are most frequently used in personal injury cases where the potential award (or reward) is greatest. Some lawyers may also agree to act on a contingency basis in outstanding debt, workmen's compensation, corporate business practice, taxation, land compensation and will contests.

2.10 Despite a longstanding and general acceptance of the contingency basis for remuneration, the U.S. courts have proscribed the use of the contingency fee in certain areas on the grounds of public policy. The Disciplinary Rules of the Code of Professional Responsibility (CPR) allow contingency fee agreements only in civil cases, prohibiting their use in criminal matters. The Ethical Considerations of the CPR also advise that contingency fees are not appropriate in domestic cases.

2.11 Across the states various methods are used to fix the fee recoverable by the lawyer. For example, the lawyer may be able to assess his fee using a formula which takes account of the size of the award recovered. In other jurisdictions the "customary rate" may be applied or the rate may be fixed by the Bar Association, by the court (particularly in the case of litigants under a disability), by statute prescribing the maximum fee that can be recovered or by an administrative agency. 2.12 The most common basis of charging for contingency fees in the USA is, however, a percentage of the sum recovered. The actual figure can be calculated in a number of ways. There may be one rate applicable to the whole recovery; decreasing percentage rates as the amount of the recovery increases; increasing percentage rates as the amount of the recovery increases, dependent on the expenditure of additional skill and effort; or a series of increasing percentage rates applied to the recovery depending on the stage reached in the proceedings before the recovery. The agreement will also stipulate whether the costs and expenses of the action are to be deducted from the recovery before or after the lawyer's percentage is computed.

2.13 No jurisdiction other than those in the United States operates an extensive contingency fee system. CHAPTER 3 - ARGUMENTS FOR AND AGAINST THE INTRODUCTION OF CONTINGENCY FEES

The risk of a conflict of interest

3.1 The principles underlying the prohibition in England and Wales of the use of contingency fees relate, as has been noted above, to the undesirability of anyone being allowed in any way to encourage or support litigation in which he does not have an interest. In particular the belief is that it is unprofessional for a lawyer to be paid on a contingency basis. The main concern is that to act on a contingency basis would, for the lawyer, produce an unacceptable conflict between his interests and those of his client and encourage him to behave in an unprofessional manner.

3.2 The conflict is said to arise from the fact that a lawyer acting on a contingency basis has a direct interest in the outcome of the litigation and that this will prevent him from being an impartial adviser. He will be open to the temptation of encouraging his client to accept an early (and perhaps unnecessarily low) settlement in order to avoid the high expense (for the lawyer) of a trial. He may concentrate on cases which have little merit but a high nuisance value, which will cause the opponent to settle even if his chances of success in any trial would be good. The lawyer's direct interest in the outcome might lead him to indulge in undesirable practices designed to enhance his client's chances, such as coaching witnesses, withholding inconvenient evidence or failing to cite legal authorities which damage his client's case.

Protection by professional codes of conduct 3.3 It is not clear that there is any real basis to these fears. Clients probably already expect their lawyers to be fully committed to the case and, since this is what every client is likely to want, to winning that case. Wanting success cannot be wrong in itself, provided that unfair means are not used in achieving it. Any tendency on the part of a lawyer to "improve" his client's case ought to be capable of control through professional codes of conduct, and the judges already possess the power to penalise solicitors personally in costs for any improper act or omission in the conduct of litigation. Both sides of the profession are, in England and Wales, subject to stringent codes of practice which, if broken, may lay the lawyer open to disciplinary proceedings before his professional body which can result in his losing his right to practise. To assume that the financial interest introduced by a contingency fee will override the standards of an individual in relation to his client is to assume an unreasonably low standard of conduct for the profession as a whole. There is no evidence to justify this assumption.

3.4 It must also be remembered that the value of the subject matter of the lawyer's work can already be relevant to the fees charged. Appendix 2 to Order 62 of the Rules of the Supreme Court sets out the factors which have to be taken into account in the exercise of a taxing officer's discretion to fix costs. These factors include, amongst others, "the importance of the cause or matter to the client" and "where money or property is involved, its amount or value". The same principles apply in respect of both contentious and non-contentious matters.

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1 Order 62 rule 11 of the Rules of the Supreme Court. The United States experience

3.5 Critics of contingency fees point to the U.S. experience as further justification for continuing the ban on their use in England and Wales. It is said that the existence of contingency fees encourages juries in civil cases to award excessively high damages to successful plaintiffs, because it is known that the balance otherwise left available after the lawyer has taken his percentage (which may be as high as 50%) may be insufficient to compensate the plaintiff for his injuries.

3.6 It is also said that the ability to sue on a contingent basis encourages the pursuit of low merit cases for nuisance value against organisations with sizeable assets, such as large companies and Government departments. The combination of high legal fees - which cannot, as in England and Wales, be recovered in costs - and the fear of punitive damages is said to encourage companies in particular to settle out of court, whatever the merits of the case, to save time and money. This causes an increase in the insurance premiums which have to be paid by large organisations which are ultimately passed on to the consumer. Finally, it is said that the existence of contingency fees encourages the distasteful practice of "bounty-hunting" lawyers chasing those affected by a major disaster.

Levels of damages

3.7 It is not clear to what extent the existence of the jury in U.S. civil actions leads to excessive awards of damages. It is at least likely, as critics of the U.S. system suggest, that knowledge of the existence of a contingency fee agreement and of the high percentages required by lawyers, will induce civil juries to make excessive awards of damages. The judge is, however, able to reduce the damages initially awarded by the jury and it may be that exceptionally high awards result where a judge fails to give adequate directions to the jury or where there is a desire to make an example of a defendant in circumstances giving rise to public concern.

3.8 Contingency fees (if introduced into England and Wales) would need to operate within the current system of awarding damages. Here, damages are almost always awarded by the judge, and only in certain limited categories of actions (such as defamation), by a jury. The present method of awarding damages is a staged process involving the determination of general damages for the type of injury suffered and special damages for expenditure and loss to the date of the hearing, plus expected loss of income and future expenses. As the sum of damages to be paid remains within the power of the judge according to well-established guidelines, the introduction of contingency fees would appear to have little bearing on the sums awarded. Just as there is no evidence that the application of the statutory charge to damages and property recovered by a legally aided litigant results in increased awards of damages, so it seems unlikely that current practices in the awards of damages would change in the event of the introduction of contingency fees. Even if it were thought that there was a risk that judges in England and Wales would react in the way in which it is said that U.S. juries react, this could be avoided by introducing a rule that the fact that the case was being run on a contingency basis should not be revealed until after judgment had been given. The approach could be similar to that taken on payment into court, the existence of which is not revealed to the judge until the case has concluded and he is considering the award of costs.

The rule that "costs follow the event"

3.9 There is a further significant difference between the position in the United States of America and that in England and Wales. Here, the losing party is usually required to pay the reasonable costs of his successful opponent. There is no such rule in the U.S. jurisdictions which allow contingency fees. At the moment in England and Wales, the risk of having to pay costs if unsuccessful could be said to act as a deterrent on the plaintiff. He has to weigh very carefully the chances of loss before embarking on litigation. If he is able to avoid the risk of paying his own costs under a contingency fee agreement, he may be more willing than at present to embark on litigation, even if he cannot avoid a potential liability to his successful opponent. Since his lawyer is, however, likely to have conducted a very rigorous assessment of the prospects of success before taking a case on a contingency basis, it is unlikely that the introduction of contingency fees, taken together with the rule that costs follow the event, would have any real impact on the propensity to litigate. Certainly it is thought that the existence in England and Wales of the rule that costs follow the event would continue to have a deterrent effect, even if contingency fees were to be allowed. Any change in this rule would certainly leave defendants unprotected, and this would not be desirable, given that it is hard to see how a defendant to an action for damages could benefit from the introduction of contingency fees.

Other factors in the US system

3.10 There are several other differences between the US jurisdictions and that in England and Wales which need to be taken into account. United States society is litigious on a scale not known in England and Wales. In the USA, treble damages may be awarded in anti-trust cases and, in other cases, punitive damages are very much more widely used than they are in England and Wales. There is, therefore, a much greater incentive in the USA for plaintiffs to pursue marginal cases. Finally, class actions may be brought in the USA and this, combined with the other factors already mentioned, encourages "bounty-hunting" by US lawyers.

Volume of litigation

3.11 It is in any event unclear that the mere existence of contingency fees would lead to an upsurge in litigation. Quite apart from any restraining effect that the costs rules might have, it is unrealistic to suppose that lawyers, as professional people running businesses, would willingly take on cases where there was very little real prospect of success. The solicitor invited to act on a contingency basis will have to make a rigorous assessment of the likely chances of success and the possible amount of damages recoverable. Cases which will be difficult to prove, perhaps involving the collection of highly complex evidence, will not be taken on unless the likely rewards are high enough to reward the work that will have to be undertaken. This assessment will have to be undertaken in more detail than where the work is undertaken on a time charge basis. So although a larger section of the community would have access to a means of funding their litigation, in practice solicitors will sift out the less viable cases as they do at present. The contingency fee would, however, give some people the opportunity of seeking legal advice and would give others the choice of how they pay for the services of a solicitor.

Access to justice

3.12 The main advantage of contingency fees is that they might give "small" plaintiffs the opportunity of bringing their claims to court. "Small" in this context means those individuals and organizations who do not receive legal aid but who nevertheless have insufficient means to support the full cost of expensive litigation and who cannot call on, for example, the support of a trade union or do not have legal expenses insurance. Where there is a desire or need to litigate there is also a demand for the means to do so. Although legal aid is widely available in this country for those whose means fall below prescribed limits, it is not available to those above those limits or in respect of certain proceedings (such as proceedings before most tribunals). There may be sections of the population whose means take them above the legal aid eligibility limits who might wish to litigate on a contingency basis.

Allowing the consumer to choose

3.13 Contingency fee arrangements may also be said to encourage a greater level of commitment on the part of the lawyer, who would have a stake in the outcome of the proceedings (if it can be accepted that the existence of this stake does not produce an unacceptable conflict of interest between the lawyer and his client, nor place the lawyer's duty to the court in jeopardy). If contingency fees were introduced this would be a further incentive for the client to shop around available firms of solicitors, since the likely cost to him would be influenced by the choice between contingency or conventional fee arrangements, as well as by the price structure of different firms. This will place pressure on the solicitor to operate efficiently, especially where the contingency basis is concerned, because the more drawn-out the proceedings, the lower the likely reward for the solicitor and the later he will get it.

3.14 Contingency fee arrangements would also spread the risk of litigation for "small" litigants who can be expected rarely to resort to the courts for the resolution of their disputes. The U.S. system of contingency fees shifts the risks of litigation from the plaintiff to the lawyer. The lawyer is able to spread those risks over a number of cases and is therefore in a better position to bear them.

3.15 Removing the ban on contingency fees would enable the client who has a cause of action to seek out the most advantageous agreement; and allowing this freedom of choice may alone be regarded as grounds for lifting the ban on contingency fees.

Product liability

3.16 There is a significant argument in favour of the introduction of contingency fees to be drawn from the US experience. It is one of a number of possible measures which may confidently be expected, on the basis of experience in the United States, to shift the present balance of advantage between the litigants in product liability cases. Such a shift would make producers more conscious of their duty to supply safe products, and induce them to give product safety higher priority in the conduct of their business. This in turn would tend to reduce the number and severity of injuries suffered by people as a result of defective and unsafe products. In the United States industry's increasing concern with product safety, which now makes European producers appear by comparison to be backward, has been fuelled by fear of adverse court judgements and awards of damages, rather than by respect for the criminal law which prescribes certain safety requirements for certain goods (such as electrical equipment) or by any altruistic wish that the risk of injuries to consumers should be kept to a minimum.

Summary

3.17 It appears that existing restrictions on the use of contingency fees developed because of the need to prevent interference in the conduct of proceedings in court and the encouragement of cases which would not otherwise have been brought. The adoption of express restrictions into professional codes of practice reflects the distaste with which lawyers, as members of a professional group, viewed the use of such devices as contingency fees.

3.18 Rules which were developed to prevent interference with the administration of justice in feudal times may no longer be appropriate to the demands of the public for the delivery of efficient and business-like legal services. There is a class of litigants who may drop claims because they are ineligible for legal aid but do not believe they have sufficient means to pursue their claims unaided, even though they are reasonably confident of securing damages. There are, however, worries about the conflict between the interests of the client and those of the solicitor which, to the extent that they do not coincide in a contingency fee agreement, may put the client in a weaker and less advantageous position.

3.19 Solicitors and barristers have had to respond to market pressures in other areas, such as advertising. The ban on the use of contingency fees could be completely lifted and all restrictions removed. It could be argued that the client does not need any protection when entering into an agreement with a solicitor and that he is perfectly capable of shopping around to seek the most advantageous terms. The solicitor does, however, have greater knowledge of the likely costs in a particular set of circumstances. He will, therefore, be in a stronger position than the client in the negotiations leading up to a contingency fee agreement. If the parties to the agreement are in unequal positions when the bargain is being struck then some means may be required of restricting the terms of agreement that the solicitor might otherwise be able to impose on the client.

3.20 The lessons to be drawn from the U.S. experience are that the unrestricted use of contingency fees appears to be undesirable. The differences between the jurisdictions are, however, such that the worst excesses of U.S. contingency fee arrangements should not develop in England and Wales. It is the combination of such factors as a jury's ability to award damages, the absence of any rule that the loser pays the winner's costs, the possibility of punitive damages and the use of class actions, none of which is present in England and Wales, which, taken together with the ability to use contingency fees, gives rise to the worries about the U.S. system. It is worth bearing in mind, moreover, that the tide of opinion in the United States of America is turning against the unrestricted use of contingency fee agreements. Some states are now reviewing their policies in this area and considering tighter controls on the way contingency fees are operated. CHAPTER 4 - HOW A SYSTEM OF CONTINGENCY FEES MIGHT OPERATE

A speculative basis

4.1 The first, and perhaps most obvious, relaxation of the existing restrictions in England and Wales would be to allow solicitors and counsel to act on a speculative basis, as is already possible in Scotland. A solicitor would be free to agree with his client that he would be paid only if the proceedings were successful. If they were, he would, however, recover only his taxed costs and would not be entitled to any share in the damages or property recovered in the litigation. If it were necessary to instruct counsel, this would again be on a speculative basis, with counsel's clerk being informed of the basis before the brief was accepted. Counsel would be free to turn it down if he were not prepared to act on a speculative basis. It would not, however, be necessary to obtain a full taxation in every case funded on a speculative basis. Taxation would be required only where, as is the case now, there is a dispute between solicitor and client as to the amount that the solicitor can reasonably charge in his bill.

4.2 There does not appear to be any substantial argument against the introduction of speculative actions in England and Wales.

4.3 The second relaxation would be to build on the introduction of the speculative action. The obvious shortcoming of such actions, so far as solicitors and counsel are concerned, is that there is no extra element to compensate them for the cases which they undertake on a speculative basis but which are unsuccessful. They will not, therefore, wish to carry too great a risk and will be concerned to be as sure as they can that they accept speculative actions only where the prospects of success are excellent. The fact that lawyers are likely to be particularly cautious in their judgment of prospective speculative actions means that the class of cases which is capable of being funded in this way is likely to be very small. Information received from the Faculty of Advocates indicates that approximately 1% of the Faculty's caseload is conducted on a speculative basis, the actions undertaken being mainly reparation cases in the Court of Session.

4.4 This difficulty could be overcome by adding an element to the taxed costs to reflect the speculative nature of the agreement and to reward the solicitor and counsel for the risk that they undertake in entering into the agreement. This might also encourage solicitors to be more willing to consider acting on a speculative basis than they would be if all they could recover was their taxed costs.

4.5 The percentage to be added to the taxed costs in the event of success could be subject only to the agreement of the solicitor and his client (which would transform the speculative action into something similar to the unrestricted contingency fee agreement known in the USA, which is unlikely to be in the public interest) or it could be a fixed percentage prescribed in legislation or in a professional code of conduct. It might be appropriate to fix the percentage by reference to the amount of taxed costs recoverable, perhaps by way of a small uplift, rather than by reference to the amount of damages or property recovered. This would mean that the lawyer would not have a direct financial interest in the level of damages recovered. The 'taxed costs' would not, in these circumstances, be the amount recoverable from the defendant, but the amount that the lawyer can reasonably expect to recover from his client. This approach might therefore also minimise the risk of the additional 'speculative' element being passed on to the unsuccessful defendant. Any tendency on the part of the lawyer to inflate his taxed costs, and thus his percentage uplift, could be controlled through the normal process of taxation.

A restricted contingency basis

4.6 The next relaxation, which could be in addition to the introduction of speculative actions, would be to allow lawyers and litigants to agree contingency fees, but on a restricted basis. The idea here would be that a lawyer could agree to be remunerated on a 'no win no fee' basis, recovering in the event of success some proportion of the amount of damages or property recovered. The fee could be based on a percentage of the damages recovered, and that percentage would be dependent on the stage the proceedings had reached when the case was concluded; for example, where the case is settled: prior to proceedings being issued, 25%; after proceedings have commenced but before trial, 33 1/3%; during or after trial, 40%; on appeal, 50%. Another method based on percentages would be to fix the percentage fee in relation to the scale of the damages recovered: the larger the sum recovered, the smaller the percentage charged. Different methods of fixing the fee might be appropriate to different types of action. Allowing a percentage dependent on the stage reached might, for example, be appropriate to a personal injury case, whereas a scale relating to the amount recovered might be more suitable in outstanding debt cases. 4.7 Restrictions on the amounts recoverable and on the stage at which they could be recovered could be contained in primary or secondary legislation promoted by the Government or alternatively in codes of conduct produced by appropriate professional bodies. (Even if contained in primary or secondary legislation, the restrictions might need to be reinforced by specific provisions in codes of conduct).

4.8 Even though legislation or a code could be used as the primary means of introducing restrictions on the terms which a lawyer might otherwise wish to insert in a contingency fee agreement, it might also be necessary to allow the client (and even possibly the lawyer) access to taxation in cases where it was said that the level of the fee was not a fair reflection of the amount of work undertaken on the client's behalf. The provisions of the Solicitors Act 1974 relating to the control of contentious business agreements could provide a suitable model for this. The High Court has jurisdiction under section 61 of the 1974 Act to set aside a contentious business agreement if it is of the opinion that the agreement is in any respect unfair and unreasonable. Where such an agreement is set aside the costs covered by it are taxed as if it had never been made. Powers similar to this could, if it were thought to be in the public interest, provide a long-stop against the risk that the particular circumstances of an individual case might render even the restricted rate of contingency fee unacceptably large, especially where it is considered that the lawyer has not in the event made a significant contribution to the success of the action.

An unrestricted contingency basis The ultimate relaxation would be to remove all existing restrictions on the use of contingency fees and put nothing in their place. It is considered that this would not be in the public interest. The litigant is in a weaker position than the lawyer in negotiating the terms of a contingency fee agreement since he does not have the latter's expert knowledge of the likely costs of legal proceedings. It would be inappropriate, therefore, to allow the lawyer to require payment of unreasonably high fees, when the litigant's desire to get his case on and his ignorance of costs matters may together mean that he is unable to reach a balanced view of the likely advantages and disadvantages of litigating on a contingency basis.

Legal aid

The arguments in favour of some relaxation of the existing restrictions on the use of contingency fees are often put forward as a consequence of concern about the position of those would-be litigants whose means take them out of the scope of the legal aid scheme, but who are nevertheless unable to fund the costs of litigation. It is for consideration whether the ability to use contingency fees, if these are permitted, is to be available regardless of whether the litigant would also qualify for legal aid.

Lawyers who act under legal aid certificates are paid out of the legal aid fund on what is known as the 'standard basis'. A lawyer being paid directly by a private client will however, claim his fees on the higher 'indemnity basis'. There are, it is said, some lawyers who are unwilling to act on a legal aid basis. It is possible that these lawyers would, however, be prepared to act on a contingency basis. A litigant who might otherwise qualify for legal aid might, therefore, prefer to instruct the lawyer of his choice to act on a contingency basis.

4.12 There are, however, advantages enjoyed by the legally aided litigant which he would lose if he chose to instruct his lawyer on a contingency fee basis. It is true that the legally aided litigant, if successful, has to meet out of the damages awarded to him the sums paid out of the legal aid fund on his behalf, but although there is perhaps an analogy here with the contingency fee arrangement, it must be remembered that the legally aided lawyer will be paid by the fund on the standard basis, which might amount to a smaller sum than would be payable under a contingency fee agreement. The legally assisted litigant also receives a certain protection against having to pay his opponent's costs in the event of the latter's success. A contingency fee agreement would be more favourable only if the lawyer had also agreed to pay the opponent's costs in the event of failure. There is, therefore, a risk of a conflict of interest arising where the client qualifies for legal aid but the solicitor would prefer to act on a contingency fee basis. In some circumstances the client may, however, prefer to proceed on a contingency basis, for example where a high legal aid contribution is required. From the client's point of view a contingency fee agreement would defer the payment of costs to the end of the case. It is for consideration, therefore, how any arrangements to introduce contingency fees should operate alongside the legal aid scheme.

The judges Consideration has already been given in this paper to the question whether the existence of contingency fee agreements would encourage judges to enhance awards of costs to successful plaintiffs. It is not clear whether there is a real danger of enhanced awards. If there is, the solution would be, probably through rules of court, to provide that the trial judge was not to be told whether the plaintiff's lawyers were acting on a contingency basis.

The costs rule

One significant difference between the U.S. jurisdictions and the position in England and Wales is that litigants here are, if unsuccessful, normally obliged to pay their opponent's costs. It is likely that the existence of this rule already acts as a deterrent against would-be plaintiffs with questionable causes of action. It is therefore not thought desirable that it should be removed, even if some form of speculative or contingency fee is to be allowed. Given that the introduction of contingency fees could be of benefit only to plaintiffs, it would not be appropriate to remove the protection the costs rule affords defendants against being the victims of questionable proceedings. The defendant to a civil action cannot sensibly refuse to take part in proceedings brought against him and may not easily be able to defend them as a litigant in person. The very fact, however, that he is a defendant means (except where there is the possibility of a counter-claim) that he will not have access to contingency fees, since success for him means only that he has avoided a claim for damages. 4.15 There is no prospect of lawyers wishing to act on a contingency basis in criminal proceedings (97% of defendants in the Crown Court are, in any event, legally aided), but even if any were, it is thought that this would be inappropriate on grounds of public policy. Comments are invited on whether there are other types of proceedings in respect of which speculative or contingency funding would be inappropriate. CHAPTER 5 - CONCLUSION

5.1 Examination of the arguments and issues arising in the debate on the introduction of contingency fees suggests that it is time to consider at least some relaxation of existing restrictions. The experience in the United States of America, however, gives pause for thought. Contingency fees are argued to have encouraged litigation there; and they have certainly imposed significant costs on business in the USA. These experiences need to be balanced against the argument that contingency fees make justice more readily available to a wider section of the population than is the case in England and Wales.

5.2 Closer examination of the systems operating in England and Wales and in the USA suggests that there are differences which may go a long way towards explaining the frequency of litigation and the high level of awards of damages in the USA. If contingency fees were introduced here under the current rules of court, with judges and not juries determining the amount of damages awarded, and with the rule that "costs follow the event" operating as at present, it might be possible to avoid the adverse effects of contingency fees as they presently operate in the USA.

5.3 The Government believes that it is appropriate to consider the introduction in England and Wales of speculative actions on the Scottish model. It is for consideration also whether this should be coupled with the ability to agree an uplift in the costs, payable to the lawyer in the event of success. This would offer an incentive to lawyers to undertake speculative actions. This would be a small, prescribed percentage of the costs, which was unrelated to the amount of the damages or property recovered in the action. A variant on this could be to allow the lawyer to recover instead a small, prescribed percentage of the amount of damages.

5.4 The Government does not believe that it is appropriate to remove all existing restrictions on the use of contingency fees. The Government does, however, invite views on the proposals in the previous paragraph and on the question whether a restricted form of contingency fee going beyond that suggested in paragraph 5.3 should be introduced in England and Wales. There is no objective evidence available to support the contention that the introduction of a contingency fee system in England and Wales would alone lead to the problems perceived in the USA. The Government would, however, welcome comments on this issue. The Work and Organisation of the Legal Profession

Contents

Chapter 1 The purpose of the Green Paper Access to legal services Efficiency of service Quality of service Competition and standards General competition policy Competition and the legal profession

Chapter 2 The provision of legal services today Definition of legal services Providers of legal services Areas of use of legal services Funding of legal services

Chapter 3 Legal education and the growth of specialisation The objective of legal education The growing importance of specialisation Existing specialist panels of solicitors Merits of specialist panels Increasing the supply of specialists Advertising of specialisms Exclusive specialisms Recognition of specialisms The Lord Chancellor's Advisory Committee on Legal Education and Conduct

Chapter 4 The maintenance of professional standards Standards of conduct Complaints and discipline Legal Services Ombudsman

Chapter 5 Advocacy The case for restricting rights of audience Obtaining rights of audience Lay advocacy Employed lawyers Role of the Advisory Committee Advocacy certificates Transitional arrangements

Chapter 6 Immunity from actions in negligence in advocacy work

Chapter 7 Attendance on counsel

Chapter 8 Direct access to counsel Contractual relations Direct access

Chapter 9 Queen's Counsel

Chapter 10 The judiciary Basis of judicial appointments The House of Lords Supreme Court Judges Masters and Registrars

Chapter 11 Barristers practices Pupillages Tenancies Chambers Partnerships Incorporation Clerks

Chapter 12 Multi-disciplinary and multi-national practices Multi-disciplinary practices Multi-national practices

Chapter 13 Advertising and information

Chapter 14 Probate

Annexes

A Competition in the EC B The providers of legal services C Academic and vocational training D Present arrangements of the Bar and the Law Society for handling complaints E Rights of audience in the courts of England and Wales CHAPTER 1 - THE PURPOSE OF THE GREEN PAPER

Objectives

1.1 Access to legal services The Government's overall objective in publishing this Green Paper is to see that the public has the best possible access to legal services and that those services are of the right quality for the particular needs of the client. The Government believes that this is best achieved by ensuring that:

(a) a market providing legal services operates freely and efficiently so as to give clients the widest possible choice of cost effective services; and

(b) the public can be certain that those services are being supplied by people who have the necessary expertise to provide a service in the area in question.

1.2 Efficiency of service The Government believes that free competition between the providers of legal services will, through the discipline of the market, ensure that the public is provided with the most efficient and effective network of legal services at the most economical price, although the Government believes that the public must also be assured of the competence of the providers of those services.

1.3 Quality of service The Government believes that the key element in ensuring an adequate quality of service to the public is the identification of the education, training, qualifications and standards of competence and conduct which are appropriate for those who practise in each area of legal services. The expertise required of practitioners should be neither less nor more than the needs of the work demand, so as to ensure both that the public can be satisfied as to the competence of the providers of legal services and at the same time that they can choose from the largest possible number and spread of such competent providers. Depending on the area of legal services in question, such providers may or may not need to be lawyers.

Competition and standards

1.4 Competition does not obviate the need to maintain the standards and integrity of the legal profession in order to safeguard the public. Safeguarding the public interest is particularly important in relation to the legal profession, especially with regard to work in the courts. The question is what balance between competition and regulation is most likely to achieve this effect. The onus should be on those who support restrictions as a way of achieving standards to justify them. The Organisation for Economic Co-operation and Development's report, "Competition Policy and the Professions", published in 1985, concluded:-

"Experience indicates that actions to promote competition in some professions do not necessarily jeopardise the quality of the services provided, and that many traditional practices excessively restrain competition and may promote the interests of the profession and not the public."

One of the purposes of this Green Paper is to explore the appropriate balance in respect of the legal profession; and it is against these criteria that the existing practices and structure of the profession should be judged.

General competition policy

1.5 The promotion of competition is one of the Government's fundamental policies. It is central to the achievement of some of the Government's most important objectives. Competition improves the provision of goods and services in the interests of industry, commerce, the professions and the consumer to stimulate an efficient, wealth-producing and growing economy which can create the prosperity essential to meet the needs and demands of the community.

1.6 When effective competition is lacking, clients' choice is artificially constrained. When there is effective competition, a customer is able to choose the goods or services he needs according to what represents best value in his circumstances in terms of quality and price. Suppliers have to compete on price; and this in turn encourages greater efficiency and the development of new markets. Practices which distort or restrict competition can deprive the customer of these benefits. In particular clients need to know what services are available in order to make an informed choice between them.

1.7 Both the increased emphasis on allowing market forces to determine the allocation of resources in the economy and the changing nature of the market for professional services prompt a re-examination of the special status of the professions in UK competition law. Although the Fair Trading Act 1973 largely applies to the professions, many professions are currently exempted from the restrictive trade practices legislation. In March 1988, the Government published a Green Paper "Review of Restrictive Trade Practices Policy" (Cm 331) foreshadowing new legislation. The paper stated that "there will be no exemptions for professional services automatically carried across into new legislation without the merits of each exemption having been established afresh."

The consultation period on the March 1988 Green Paper ended in September 1988, and detailed proposals for the reform of the restrictive trade practices legislation will be published shortly. As the new policy will have a considerable bearing on the legal profession, it seems appropriate to clarify the Government's general intentions in the present Green Paper. The Government has concluded that there should be no exclusion for the professions from the new legislation and that the rules of professional bodies should generally be subject to the same tests administered by a new competition authority as other sectors of the economy. The Government's view is that, like Article 85 of the Treaty of Rome, the legislation should prohibit agreements which have the effect of restricting or distorting competition, although in the case of restrictions directly imposed by statute the competition authority would be able only to offer its view on the economic effect of the restriction. Where the authority found that an agreement infringed this prohibition, it could nevertheless grant an exemption if it believed the agreement made a sufficient contribution to economic or technical progress and that consumers shared adequately in the benefits of this. In due course, therefore the Law Society and the Bar Council will have to examine their rules and guidance not only in the light of the recommendations in this Green Paper, but also in the light of the tests to be applied by the new competition authority. Competition and the legal profession

1.9 In the law as in other professions there are a number of restrictions. Many of these have been defended on the ground that they protect the interests of the client. Competition has often been regarded as inappropriate to or even incompatible with professional status and standards and with consumer protection. Regulation in the legal profession has been achieved through a combination of direct statutory control and, more frequently, self-regulation through the profession's own rules. Areas such as establishment in the profession, advertising, setting of fees and charges and business structure and access to the public have often been controlled by regulation rather than being subject to market forces.

1.10 In recent years there have been a number of changes, some resulting from recommendations by the Monopolies and Mergers Commission following references under the Fair Trading Act. For instance, licensed conveyancers have been allowed to compete with solicitors in England and Wales for conveyancing work; and advertising restrictions by solicitors have been considerably relaxed. Surveys suggest that the result of this increase in competition has been a reduction in the price of conveyancing. The Government believes that there is no reason for excluding the legal profession from the discipline of competition that applies to the rest of the economy, provided that the interests of justice and the needs of those who use or are affected by the law are safeguarded; and indeed there are wide areas of the profession where competition already operates.

EC implications 1.11 The Government takes the view that, whatever steps may be taken to give effect to the proposals in this Green Paper, the UK must ensure it avoids introducing any new restrictions which might breach the European Community Treaty. Annex A deals with the possibility of an increase in competition for the provision of legal services from European lawyers which may in any event result from the changes to be brought about in 1992 by virtue of the Single European Act.

The timing of this review

1.12 The Government reached the decision(^1) that it was appropriate to undertake this review now in the light of the Report "A Time for Change" presented to the General Council of the Bar and the Council of the Law Society in July 1988 by the Committee on the Future of the Legal Profession (the Marre Committee), a committee which those two bodies had set up in 1986. That Report, commissioned by the two major professional bodies whose members work in legal services, was the first reappraisal of the organisation of the legal profession since the Royal Commission on Legal Services (the Benson Commission) published its Report(^2) in October 1979. The Marre Committee's Report indicated a number of areas where change might now be appropriate. The fact that the two major professional bodies had agreed on the need for such a study, taken together with the conclusions of the report, in turn led the Government to the view that the time was now right for it to undertake its own fresh review of the provision of legal services to ensure that the needs of clients and the interests of justice would best be safeguarded in the years ahead.

(^1)(announced in Hansard 24 October 1988, col 1466)

(^2)(Cmnd 7648) Consultation

1.13 The Government hopes this examination of the legal profession will be publicly regarded as a matter of great importance. These are not matters of concern only to lawyers. The public have a vital interest from many different points of view. The Government will therefore welcome comment from as broad a range of opinion as possible. At the same time, the Government recognises that many of the features of the legal profession have been the subject of recent extensive debate. In the case of some of these features the Government will, therefore, in this Green Paper also be indicating its own provisional view on the right way forward.

1.14 The Government would welcome comments on the proposals in this document by 2 May 1989. Submissions should be addressed to:

Room 417 Lord Chancellor's Department Trevelyan House 30 Great Peter Street London SW1P 2BY CHAPTER 2 - THE PROVISION OF LEGAL SERVICES TODAY

The definition of legal services

2.1 A comprehensive definition of what is meant by legal services is very difficult to frame, but, broadly speaking, legal services are concerned with the advice, assistance and representation required by a person in connection with his rights, duties and liabilities. These may of course change over the years with the prevailing values of society, the legislative will of Parliament and the decisions of the courts. Most services which are "legal", in the sense that a lawyer often performs them in the ordinary course of his practice, may also be performed by non-lawyers. In England and Wales the only legal services which are by law reserved specifically to lawyers are handling cases in court and applying for grants of probate or letters of administration for reward. These matters are considered further in Chapters 5 and 14.

2.2 In addition, conveyancing for reward is restricted to lawyers, licensed conveyancers and certain public officials. Solicitors used to have an effective monopoly in the provision of conveyancing services but this monopoly was abolished by Parliament in 1985, when licensed conveyancers were allowed to enter the conveyancing market in direct competition with solicitors. Conveyancing by solicitors and licensed conveyancers employed by institutions and bodies whose main business lay in another field was not, however, allowed at that time, although a framework for this was subsequently enacted (which has not yet been brought into force) in the Building Societies Act 1986. Accordingly the Government has thought it right to re-examine this field as part of this review; and a separate consultation paper on the subject of The providers of legal services

2.3 The Government believes that access to legal services by those who need them is fundamental to the rule of law and the preservation of liberty. It is important to recognise, however, that such access does not necessarily mean access to a lawyer. Much depends on the level and type of legal service required. In some cases a friend or advice agency may suffice; in others advice by one who is not only a lawyer but also a specialist lawyer, such as a patent lawyer, may be essential. Annex B contains background information on some of those who provide legal services, including barristers and solicitors.

2.4 A person requiring advice, assistance or representation needs to be satisfied that the practitioner or agency from whom assistance is sought is competent to deal with the matter in issue. Clients are not usually in the best position to judge competence, particularly if the matter on which advice is sought is complex and the practitioner whom they have approached is held out to have expertise in the area in question. This will be particularly relevant where the practitioner approached is a lawyer. The Government believes that it is a matter of public interest that practitioners holding themselves out as professional lawyers are nationally recognised as having standards on which the public can rely. This means that lawyers must have appropriate qualifications for the work they undertake; must abide by recognised standards for doing this work; and must be subject to effective monitoring to ensure that the work is properly done. Areas of use of legal services

2.5 A few examples of areas where legal services may be needed are set out below by way of illustration. These are:

(a) the home; (b) the family; (c) employment; (d) social welfare; (e) consumer protection; (f) commercial and financial operations; (g) accidents and compensation for personal injury; and (h) involvement with the criminal law.

(a) The home Conveyancing services are available from a solicitor or licensed conveyancer (see para 2.2 above). Advice in connection with the mortgage and insurance cover may be provided by a solicitor, but may also be provided by a building society, bank, accountant or other financial adviser. Disputes arising in connection with the property, for instance with landlords or neighbours, can sometimes be resolved amicably, perhaps with the assistance of a friend as mediator. If this is not possible, a citizens advice bureau (CAB) or law centre may be able to help. If the dispute is so serious that it becomes necessary to take legal proceedings it is likely that advice will be required from a lawyer.

(b) The family A person may need advice, assistance or representation in connection with marriage or divorce, or with matters relating to children, elderly relatives, welfare benefits, pensions or wills. He or she may in many instances turn to friends, advice agencies such as the CABx or the National Society for the Prevention of Cruelty to Children, to social workers or to financial advisers. In more difficult cases, or where disputes may come before the courts, a person is likely to seek the assistance of a lawyer.

(c) Employment Legal services may be needed in connection with a variety of matters such as contracts of employment, conditions of work, racial and sexual discrimination, industrial action, unlawful behaviour by trade unions, redundancy or dismissal. Employees, potential employees and employers are all likely to need legal services here. Depending on the nature of the advice, assistance or representation required they may turn, for example, to trade unions, trade associations, CABx, the Commissioner for the Rights of Trade Union Members, the Advisory Conciliation and Arbitration Service, the Commission for Racial Equality, the Equal Opportunities Commission or to lawyers.

(d) Social welfare A person may need advice, assistance or representation in connection with entitlement to welfare benefits or the resolution of problems caused by homelessness or nationality. Advice agencies, such as the CABx, the Child Poverty Action Group and the United Kingdom Immigrants Advisory Service, have developed an expertise in welfare areas such as these. Help may also be provided by law centres, social workers and lawyers.

(e) **Consumer protection** Legal services here can cover a wide area ranging from rights and liabilities in connection with the purchase and sale of goods and services and the whole area of product liability at one end, to counselling for debt at the other. Advice and assistance may be available from organisations such as the National Consumer Council, the Consumers' Association, CABx and other advice agencies and trading standards officers. As in the other examples, a lawyer is most likely to become involved if complex commercial documentation is required or court proceedings are contemplated.

(f) **Commercial and financial operations** Legal services here can cover such matters as setting up and running a business or company, taxation, bankruptcy and insolvency, intellectual property rights, commercial conveyancing, pensions, insurance, matters of contract, the financial regulation of markets and the effect on transactions of multi-national operations. A range of practitioners are in the market for the provision of legal services in some or all of these areas, including lawyers both general and offering a variety of specialist services, licensed conveyancers, patent agents, banks, building societies, accountants, insolvency practitioners and chartered secretaries.

(g) **Accidents and compensation for personal injury** Accidents may give rise to both civil and criminal liability. Legal services are likely to be needed both by any person who may have caused the accident and by the person who is injured as a result of it. Legal services here are likely to be provided by a lawyer, if the matter seems likely to become the subject of court proceedings, but advice and assistance may also be available from other sources such as trade unions or advice agencies.

(h) Involvement with the criminal law

Lawyers are the main providers of legal services here, especially in connection with the conduct of cases in court. Advice and assistance may, however, also be available from, for example, social workers, probation officers and advice agencies.

Funding of legal services

2.6 This chapter has looked very briefly at some of the situations where legal services are likely to be required and where the public need to have access to them. It has also mentioned some of the practitioners and agencies who may provide such services. The Government thinks it right that these services should be funded in a variety of ways. Those who cannot afford to pay for the legal services they require can often get the help they need from organisations supported by public funds; and, where necessary, they can get access to lawyers through the legal aid and advice schemes. Those who can themselves afford to pay for the services they require want to be sure they are using their money to obtain the service which is best suited to their needs. 2.7 So far as publicly funded work is concerned, the Government believes that the new Legal Aid Act, together with the Legal Aid Board it has created to take over the administration of legal aid from 1 April 1989, will provide a system that is efficient and effective and give to all concerned the best possible value in return for the money spent on it, and which will have the flexibility to meet changing demands and circumstances.

2.8 In privately funded work also the Government is keen to encourage new approaches. One idea which has attracted much attention in recent years - contingency fees - is the subject of a separate consultation paper issued in parallel with this Green Paper. The Government's proposals to increase the possibilities for advertising by the legal profession, and thereby to enable the public to make more informed and cost-effective choices among the providers of legal services, can be found in Chapter 13 of this Green Paper. CHAPTER 3 - LEGAL EDUCATION AND THE GROWTH OF SPECIALISATION

The objective of legal education

3.1 The Report of the Committee on Legal Education published in March 1971 (Ormrod) (Cmnd. 4595) concluded that:

"Legal education should not attempt to equip the lawyer at qualification with a comprehensive knowledge of every subject he may encounter in practice; instead, it should concentrate on providing him with the best possible general introduction so as to enable him, with the help of experience and continuing education after qualification, to become a fully equipped member of the profession."

The Government believes this objective for legal education is still valid today.

3.2 The Government also believes that it is consistent with its objectives for the provision of legal services that practitioners must be able to show their clients that they possess the necessary competence to perform the particular service sought from them, especially where the service requires the possession of specialist expertise. The Government believes that it is not of itself sufficient for practitioners to belong to a particular branch of the legal profession, or, in some cases, to other professions.

Current position

3.3 Entry to the legal profession requires completion of three training stages, an academic, a vocational and a practical stage. Entrants normally complete the academic stage by taking a law degree. Thereafter, barristers and solicitors have separate systems of vocational and practical training.

3.4 Both branches of the profession are in the process of conducting reviews of their own training arrangements with the aim of making these more relevant to the needs of practice. The Bar intend to introduce a new finals course in the autumn of 1989 which will emphasise practical skills such as advocacy, drafting, advising and negotiating; and there are at present moves to formalise the minimum contents of pupillage. The Law Society are considering including additional specialist law options during the finals course, training in management and communication skills and the extension of compulsory post-qualification training beyond the first three years, in order to keep solicitors abreast of developments in the law.

The growing importance of specialisation

3.5 The thrust of these changes is to emphasise the growing importance, which has been noted over the past decade, of the acquisition of specialist skills by practitioners. The need for this was recognised by the Royal Commission on Legal Services as long ago as 1979 when it recommended that the formal introduction of specialisation into the solicitors' profession would be of significant benefit to the public (paras 22.55 and 27.23). In 1987, in the White Paper "Legal Aid in England and Wales: A New Framework" (Cm 118 para 58), the Government stated that it was desirable that solicitors doing legal aid work should have special skills in the area concerned, and that it was attracted by the idea that legal aid work should be done by panels of solicitors with specialist experience in each category. In 1988 the Civil Justice Review (Cm 394 CONFIDENTIAL

para 212) recommended that specialisation schemes should be established for all the main areas of litigation; and Marre (para 16.17) recognised that "specialisation is inevitable."

Existing specialist panels of solicitors

3.6 The Law Society have already established specialist panels for child care and mental health work. The Child Care Panel was set up in 1984 and currently has around 1,500 members. The Mental Health Panel was set up in 1983 and currently has around 200 members. Membership of both these panels is dependent on experience in advocacy before the relevant tribunals, attendance on approved courses and interviews. Also under the duty solicitor schemes there are some thousands of solicitors (and their representatives) who provide duty solicitor services. They need to have a minimum of 12 months' advocacy experience and are interviewed by local practitioners to confirm their suitability. The Law Society are also currently considering the extension of specialist panels into other areas of work such as planning, personal injury and medical negligence.

Merits of specialist panels

3.7 The main advantage of specialist panels to the public is to give them an easier and more informed choice of practitioners who they can be assured are skilled in a particular field of law. At the same time, not every area of law requires specialist expertise. Care must be taken to ensure that only those areas of law which need to be specialisms are designated as such, and that the criteria for recognition as a specialist are high enough to ensure competence and maintain standards but no higher. The criteria must not become unnecessary obstacles which discourage practitioners from becoming specialists, or which artificially limit the supply of legal services to the public in a particular field.

Increasing the supply of specialists

3.8 The Government considers that the way to ensure that the expertise of practitioners is best matched to the particular demands of the work in question, and that the public has the widest possible choice of competent practitioners in the various fields of law, is for areas of specialist expertise to be developed, with standards of education, training, qualifications and conduct appropriate to each. It may be that some of these specialisms will not require the services of lawyers. The following questions then arise:

(a) which areas of work require specialist expertise; (b) what is the appropriate level of education, qualifications and training required to be a specialist in any given area; (c) who is to provide the necessary education, qualifications and training; and (d) how are appropriate standards of conduct to be set for practitioners and who is to monitor these standards.

These questions are addressed in paras 3.11 to 3.13 below and in Chapter 4.

Advertising of specialisms

3.9 An important purpose of specialisms is to provide the public with more information to help them choose a practitioner appropriate for their needs. Accredited specialists should therefore be able to advertise themselves as such to the general public. The Bar and the Law Society already operate a limited form of advertising through listings in their professional directories; and the Law Society permits also the circulation of lists of members on, for instance the Mental Health Panel, to interested organisations such as CABx, social services departments, psychiatric units and the courts. Further consideration should, however, be given by both individual practitioners and the relevant professional bodies to allowing those practitioners who qualify as specialists (see also Chapter 13 below) to advertise themselves as such. This does not mean that non-specialists should not be allowed to advertise their services; merely that only those who are recognised specialists in a particular field should be able to hold themselves out as such to potential clients.

Exclusive specialisms

3.10 The Government does not believe that practice in an area which has been designated as a specialism should be restricted to those recognised as specialist practitioners alone. Such an approach could create new entry barriers, put up costs, deprive clients of choice and protect those within the specialism from competition from those outside it. An exception is advocacy, where the Government believes that the needs of the administration of justice require special arrangements to be made. This is considered in Chapter 5 below.

Recognition of specialisms

3.11 The Government believes that a formal mechanism should be established to advise on the matters outlined in para 3.8. The Government believes also that, in order to ensure that the public know that recognition as a specialist practitioner has real value, the requirements for the education, training and qualifications of recognised providers of specialist services should in future be approved by the Lord Chancellor, after he has taken advice from his Advisory Committee on Legal Education. The arrangements for codes of conduct are set out in Chapter 4. The Government expects there will in future be a variety of providers of such specialist services.

The Lord Chancellor's Advisory Committee on Legal Education and Conduct

3.12 The Lord Chancellor's Advisory Committee on Legal Education (the Advisory Committee) was set up in 1971 as a result of recommendations in the Report of the Committee on Legal Education (Ormrod, Cm 8595). In order that it may carry out the new functions the Government now proposes for it, the Advisory Committee should be reconstituted as a vigorous and active standing committee, dealing with both education and conduct, which would meet regularly. To accord with its new role this Committee should in future be known as the Lord Chancellor's Advisory Committee on Legal Education and Conduct. The Committee's terms of reference should be:

(a) To keep under review the education and training of lawyers at the academic, vocational and post-vocational stages to ensure that that education and training is relevant to the needs of practice and to the efficient delivery of legal services to the public. (A possible framework for the academic and vocational training of lawyers is set out at Annex C, which the Advisory Committee would be invited to consider at an early stage);

(b) To consider, whether on its own initiative or when requested to do so by the Lord Chancellor: what areas of legal services require specialist expertise and whether that specialist expertise needs to be provided by a fully trained lawyer; and what the education, qualifications and training of specialists, both legal practitioners and others, should be in the various areas designated as requiring specialist expertise;

(c) To keep under review, whether on its own initiative or when requested to do so by the Lord Chancellor, the accredited specialisms and the education and training requirements for these to ensure that they continue to meet the needs of the public for the efficient delivery of legal services; and

(d) To advise the Lord Chancellor on the appropriate codes of conduct which should be followed by lawyers and other practitioners recognised as suitable to undertake work in the recognised specialisms. (It is envisaged that at least two separate codes of conduct will be needed to cover:

(i) advice work; and (ii) advocacy.

This last area is considered further in Chapter 4.)

The Advisory Committee should submit an annual report covering all these areas to the Lord Chancellor. The annual report would be laid before Parliament. The Committee might also submit proposals and recommendations to the Bar or the Law Society or to other professional bodies, where it considers this appropriate or where such bodies ask for its advice. Final decisions on whether a particular specialist area of expertise should be recognised as such and on what standards of education and training are appropriate in each case should rest with the Lord Chancellor, following advice from the Advisory Committee. In addition, before recognising any particular professional body as competent to authorise individual practitioners as specialists in a particular field, the Lord Chancellor would have to be satisfied that the professional body could:

(a) provide the appropriate education and training, either itself or, on a repayment basis, with the assistance of appropriate educational establishments; and

(b) provide sufficient control over its members to ensure that satisfactory standards of conduct and behaviour are maintained and enforced (This is considered further in Chapter 4).

It would of course be for the various interested professional bodies to decide what they wished to offer by way of education, training and discipline in the light of the standards set by the Lord Chancellor for the various specialisms.

Under the proposals outlined above, the Advisory Committee will in future play an important role, both in ensuring the supply of legal services of quality to the public and in maintaining the standards of conduct expected of practitioners. The Government believes that the composition of the Advisory Committee should reflect this new role by containing a majority of lay members. Accordingly the Government proposes that the new Advisory Committee should consist of 15 members, all appointed by the Lord Chancellor and comprising:-

(a) a chairman, who should be a judge; (b) 2 barristers appointed after consultation with the General Council of the Bar; (c) 2 solicitors appointed after consultation with the Council of the Law Society; (d) 2 academic representatives - appointed after consultation with those representing the university and polytechnic law schools; and (e) 8 lay representatives appointed after wide consultation.

3.15 The Government proposes that the secretariat of the Advisory Committee should be provided by the Lord Chancellor's Department.

Summary 3.16 The Government would welcome views on the proposals in this chapter, in particular on:

(a) the proposed terms of reference of the Advisory Committee;

(b) the proposed membership of the Advisory Committee; and

(c) the suggestions for academic and vocational training set out at Annex C. CHAPTER 4 - MAINTENANCE OF PROFESSIONAL STANDARDS

4.1 The Government believes that it should be the duty of any professional body to ensure that the standards of competence and professional conduct among persons who practise in that profession are sufficient to secure adequate protection for clients, and that the services provided by such persons are provided both economically and efficiently.

4.2 This means that such a professional body must ensure that:

(a) professional services are offered efficiently and with the required degree of professional expertise;

(b) any complaints about services are investigated promptly, thoroughly and impartially;

(c) matters are put right as quickly as possible with, where necessary, appropriate recompense;

(d) where a professional man or woman fails to meet the required standards, appropriate action is taken; and

(e) where the failure amounts to professional misconduct, appropriate sanctions are imposed, if necessary amounting to expulsion from the profession.

4.3 The Government believes that those who provide the public with legal services must do so in a competent and professional manner. It should therefore be one of the functions of the legal professional bodies to ensure this happens.

(A) Standards of conduct

Present arrangements

4.4 At present the Bar and the Law Society provide for standards of conduct in different ways:

(a) The Bar

4.5 The Bar has a written Code of Conduct. Last year it was thoroughly revised. The new version is due to come into force on 1 February 1989. It sets out the general principles which apply to all barristers, whether in independent practice or in employment, including their general duties, the rules on acceptance of instructions and on withdrawal from a case, the duty of the barrister to the client, the way a case should be conducted both in and out of court, and what is to happen when a conflict of interest arises.

(b) The Law Society

4.6 The Law Society publishes Practice Rules. The current rules are the 1988 Practice Rules which govern, for example, obtaining instructions, accounting for commissions and the supervision of a solicitor's office; and when a solicitor may act for both vendor and purchaser. Referrals and introductions and publicity are also touched on briefly in the Rules but are dealt with in more detail in separate codes. The Rules do not, however, provide for matters of good practice such as proper communication with the client and the avoidance of delay.

4.7 The Law Society publishes a guide called "The Professional Conduct of Solicitors" to deal with these matters of practice. This contains detailed statements of principle together with an indication of best or acceptable practice. Although such an explanation of these principles is obviously helpful, it remains odd that what is intended to lead to sound practice does not appear in the Practice Rules, especially as any breach of these principles might put solicitors at risk of allegations of inadequate professional services or professional misconduct.

Codes of professional conduct and standards

4.8 The Government believes there are certain areas of practice which are of such fundamental importance that:

(a) there should be clear written statements of the practice which must be followed;

(b) these written statements should be set out in a way which is easily accessible both to lawyers and their clients; and

(c) failure to observe these practice rules should be a cause for disciplinary proceedings.

4.9 Recommendations on these lines were made by Benson in 1979. The Civil Justice Review published in June 1988 (Cm 394) also recommended (R 18(1)) that both the Bar and the Law Society should issue specific written professional standards relating to the conduct of all principal types of litigation.

4.10 The Law Society published written standards in 1985 to cover responsibility for the client's case, communication with the client and information on costs. They appear as an appendix in "The Professional Conduct of Solicitors". The introduction to these standards states that:-

"They are guidelines. They will be helpful in all cases. It will be for the solicitor to judge when a standard can be ignored, but also for him to justify his decision should the client feel aggrieved."

The Government is not convinced that either this statement or the positioning of the standards in the Guide adequately underlines their importance.

The Bar has not yet introduced any standards of this kind, although it is about to do so.

The Government's proposals

4.11 The Government now therefore proposes that there should in future be written codes which specifically set professional standards. The Government envisages that two separate professional codes will be necessary. One will deal with the provision of legal advice and assistance generally. The other will cover the particular issues which are connected with the handling of briefs and the general conduct of cases in court, since in advocacy work the maintenance of standards both of skill and integrity has much to do with the independence of the advocate, his regular application to his work in the courts, and with his need to satisfy the requirements of a client able to make an informed choice of advocate. The areas to be covered are set out in broad terms in paras 4.14 and 4.15 below. The Lord Chancellor will look for advice on what should be the principles embodied in these codes from his Advisory Committee on Legal Education and Conduct, whose membership and terms of reference will be broadened so as to encompass this function (see Chapter 3, paras 3.12-3.15 of this Green Paper). Professional bodies whose members wish to offer advisory and advocacy services will be required to submit their proposed codes of conduct for the endorsement of the Advisory Committee whose role it will be to ensure that such codes of conduct embody the approved principles.

4.12 The Government proposes that the Lord Chancellor should prescribe by statutory instrument the principles which must be embodied in these codes so as to ensure that they have Parliamentary approval. The Government is not prepared to leave it to the legal profession to settle the principles which these codes should adopt because they will be of such great importance both to the administration of justice and to the public. Moreover, in the future the legal profession is likely to continue to contain a number of different professional bodies; and it is important that they should all be subject to minimum professional standards.

4.13 A code setting out the approved general principles would be a requirement for any profession whose members offered legal advice for reward; and a code dealing similarly with the conduct of cases in court would be a requirement for all advocates (see Chapter 5 below). The relevant professional bodies would be expected to enforce the codes and to satisfy the Advisory Committee that they had adequate arrangements in place for this purpose. Failure to comply with any requirement of the codes would render a practitioner liable to a range of sanctions including a reduction in fees after proceedings conducted by the appropriate professional body. In addition all courts should have power to require any advocate to pay personally costs incurred by any party to an action, if the court judged this appropriate.

Code 1 Provision of legal advice and assistance

4.14 A client seeking advice and assistance should be given full and proper advice about his case. Poor communication seems to be the cause of most complaints about solicitors. This code will therefore need to provide that:-

(a) the client is given a full explanation of the issues and what needs to be done;

(b) the client is kept fully informed about the progress of his case;

(c) the client is given a proper explanation of the fees and costs likely to be incurred: this explanation should be supplied both orally and in writing;

(d) the client understands who is responsible for the overall supervision and the day to day handling of his case; and

(e) the practitioner conducts the case in an efficient manner.

Code 2 Advocacy and ancillary matters

4.15 This code will need to ensure that:-

(a) incoming work is managed in chambers or offices in such a way that there is adequate pre-trial preparation of cases; and that in particular:- (i) early conferences are arranged when necessary;

(ii) in criminal cases there is careful advice about the intended plea, in order to avoid changes of plea at the trial so far as possible;

(iii) where possible, issues in dispute are identified before trial; and

(iv) cases are properly prepared for court;

(b) cases in court are conducted competently and in the light of clear ethical standards so that:-

(i) advocates are aware of the paramountcy of their duty to the court, their duties to the client, to witnesses and to third parties; and

(ii) advocates do not waste the time of the court; and

(c) defence and prosecution advocates are aware of their special responsibilities in criminal cases; in particular that advocates who provide representation in the more serious cases which are tried in the Crown Court should not, in any given case, have been involved also in the investigation of the evidence.

(B) Complaints and discipline

Present arrangements

(a) The Bar 4.16 A barrister is immune from an action for negligence brought by a client in respect of the conduct and management of a case in court (see Chapter 6 below). He or she is not, however, immune from actions for negligence in other situations. Indeed all practising barristers are required to have professional indemnity insurance of £250,000 for each and every claim. A barrister is also subject to professional discipline in respect of the conduct of a case whether in or out of court.

4.17 Complaints against barristers come largely from members of the public, although some come also from the judiciary or magistracy, court officials, other barristers and solicitors. The present machinery for dealing with complaints is set out in Annex D, Part 1.

(b) The Law Society

4.18 All solicitors in practice are required to be covered by professional indemnity insurance against loss arising from civil liability claims. In addition the Law Society administers a fund to provide compensation in cases of dishonesty by solicitors or their employers or of failure by a solicitor to account for any money in connection with any trust of which he or she is or was a trustee. These arrangements go wider than those covering barristers, but barristers do not need such wide protection because they do not carry out transactions on behalf of clients or handle clients' money.

4.19 Complaints against solicitors may raise issues of conduct or inadequate professional services - "shoddy work." Such complaints must be made to the Solicitors' Complaints Bureau where most will be settled. A minority of complaints will, however, be considered also by the Solicitors' Disciplinary Tribunal, the High Court or the Lay Observer. The details of these arrangements are set out in Annex D, Part 2.

Criticism of existing procedures: the Law Society

4.20 Criticism of the complaints procedures has been directed largely at the Law Society. It is not surprising that there are more complaints about solicitors than barristers. There are ten times as many solicitors in practice. Furthermore, solicitors have a more direct and longer term involvement with their clients. In 1987 the Solicitors Complaints Bureau (SCB) received in excess of 17,800 complaints, while the Bar only received perhaps 1% of that number.

4.21 The SCB was set up in 1986. Previously complaints had been handled by the Law Society's Professional Purposes Department; and this arrangement had attracted criticism on the ground that it could not be shown to be sufficiently impartial. Both the Bar and the Law Society combine the roles of supervision and professional representation. It is obviously easier to demonstrate the independence and impartiality necessary for handling disciplinary cases when the two roles are split (as for example is the case with the General Medical Council and the British Medical Association). The Law Society appear to have hoped that, by setting up the SCB in a separate establishment, with a lay-dominated Investigation Committee to monitor its performance, they would, notwithstanding that they fund the SCB, enable it to be regarded as independent of the Law Society. It is not clear that they have as yet been successful in this.

Problems with the Law Society's present arrangements 4.22 The Government considers that problems lie particularly in the following areas:

(a) The definition of shoddy work

4.23 The Law Society's investigation of complaints was confined to matters of conduct until the beginning of 1987, but it may now also, under powers granted by the Administration of Justice Act 1985, investigate complaints about inadequate professional services, which are often described as "shoddy work". The Chairman of the Adjudication Committee in the first report of the SCB explained that his committee had been in difficulty in identifying what the expression "shoddy work" might cover. The Government believes the difficulty does not arise only because this is a new jurisdiction, but also because it is at present difficult to identify what precise standards solicitors are expected to meet. The Government suggests that the adoption of clear standards in a written code of conduct will make the task of the Adjudication Committee easier.

(b) Negligence cases

4.24 The SCB is unwilling to take action where it appears that the complaint raises a question of negligence as opposed to professional misconduct. It explains the two expressions as follows:-

(i) "Negligence is a civil 'offence' where the solicitor has been inadvertently incompetent. In negligence the solicitor is in breach of his duty of care to the client and as a consequence the client has suffered loss in money terms."

(ii) "Professional misconduct is [broadly] wilful misbehaviour by a solicitor which may involve disregarding certain rules of conduct or may be of a type that could bring the profession into disrepute in dealings with a client. It may now include incompetence falling short of negligence."

4.25 The SCB explains that it cannot act in negligence cases because "negligence is a matter of law, which must be settled in the last resort by the courts." Instead, when the SCB identifies a possible negligence case, it sends the complainant to a solicitor on one of its negligence panels.

4.26 In his 1987 report (Cm 626) the Lay Observer comments at para 47:-

"Even if a solicitor might have been negligent, would it not be appropriate in some cases to deal with the complaint under the shoddy work powers rather than by proceedings for negligence, for example where a reduction in the bill is likely to be the appropriate remedy."

The Government agrees with this and also with the Lay Observer's comment elsewhere in his report that the Law Society needs to consider how far the investigation of complaints is hampered by solicitors who refuse to co-operate on the grounds that this might prejudice their case in proceedings. Such prejudice is not inevitable. In some cases, a finding of shoddy work will result in financial recompense and settlement. In others the finding will help to demonstrate a poor performance but will not necessarily imply that the performance was caused by negligence. The possibility of court proceedings should not be used as an excuse to prevent or delay making right what has gone wrong, especially when the damage is perfectly clear. (c) Confusion of choice

4.27 A complaint may raise issues besides shoddy work or negligence, where there are several ways to take the issue forward. For example, in some cases where it appears that the solicitor's fees are too high, it is possible to apply either to the Law Society for a remuneration certificate or to the Court for taxation. The Government agrees with the Lay Observer that the Law Society needs to make more effort to explain to the public the nature of its various powers and the relationship between them.

(d) Delay

4.28 The SCB admits that its handling of complaints is often subject to delay. This may be due partly to its high workload and partly to solicitors failing to reply to the Bureau's letters. The average shoddy work complaint at present takes six months to work through the system.

4.29 The Government expects the Law Society to take measures to cut down the number of cases which need to go through the full SCB procedure. A voluntary arbitration procedure for use in negligence cases already exists, but it is rarely used. Attempts to reach a settlement in cases where the client is concerned principally to get the work done have been more successful. The Government would like to see the Law Society encourage the development of local conciliation schemes which could cover all complaints. There are 127 local law societies. The Government believes there is scope for them to play a more active role in settling disputes between aggrieved clients and solicitors. The SCB Investigation Committee hopes that its lay element and its independence help to reduce the workload of the Lay Observer, but it seems clear that the SCB has not yet developed machinery for dealing with complaints which achieves public confidence. The Lay Observer, as explained above, has powers to examine the way complaints are handled but not to re-examine the complaint. The Government believes, therefore, that the Lay Observer's powers are inadequate. The Government considers that the Lay Observer is hampered in his work by having limited powers to take cases to the Solicitors' Disciplinary Tribunal, no powers of referral to the SCB, and no powers to reinvestigate the case or to award compensation. Finally it is anomalous that there is no equivalent office holder to review the complaints procedure of the Bar.

Accordingly the Government proposes to abolish the office of Lay Observer. Instead, the Lord Chancellor will appoint a Legal Services Ombudsman, who will have power to:

(a) examine allegations about the way complaints about barristers, solicitors or any other new legal professionals, who may establish themselves in the future, have been handled by the relevant professional body;

(b) reinvestigate cases where he considers it necessary;

(c) refer cases back to any body which originally investigated the complaint or to any disciplinary tribunal which has power to consider the complaint (this would be the normal course in the case of decisions of the High Court in respect of solicitors' conduct or decisions of the Visitors (who are judges of the High Court: see para 3 of Annex D) in respect of barristers' conduct);

(d) recommend the payment of compensation by the professional body concerned;

(e) recommend changes or improvements to the complaints procedures of the Bar, the Law Society or any other relevant supervisory body; and

(f) publicise his decisions.

Summary of proposals

4.32 (a) The Government intends to prescribe, by way of statutory instrument, clear principles and standards, for embodiment in two codes of conduct to be adopted by professional bodies, covering:-

(i) the provision of legal advice and assistance; and

(ii) the preparation of cases and their conduct in court.

Failure to observe any requirement of the principles and standards set out in these codes would be a cause for disciplinary proceedings.

(b) The Government believes that each professional body should demonstrate that it has a supervisory body to investigate complaints which can be shown to be both impartial and independent of the profession's representational body. (c) The Government intends to replace the Lay Observer by a Legal Services Ombudsman who would have greater powers to examine the handling of complaints by the Bar, the Law Society and any other legal professional body. CHAPTER 5 - ADVOCACY

Introduction

5.1 A right of audience entitles a person to address a court of law on behalf of another. In England and Wales, restrictions are at present placed, either by statute or by usage regulated by the judges, on rights of audience in all courts of law. The Government wishes to examine in this chapter whether the current restrictions on rights of audience before the courts are compatible with the key principles outlined in Chapter 1, particularly in the light of the matters discussed in Chapter 3.

5.2 A summary of rights of audience in the courts of England and Wales is at Annex E.

The case for restricting rights of audience

5.3 Under an adversarial system such as ours, the presentation of both the facts and the legal authorities on which the judge's decision will be based is the responsibility of the advocates representing the parties concerned. Judges in this country work largely without legal support, and their judgments are prepared entirely by themselves with no assistance, so far as law is concerned, except the representations of the parties. They therefore need to be able to rely on the strength and adequacy of the representations of the advocates appearing before them. An inexperienced or incompetent advocate who cannot present a case properly is not only unlikely to be able to do justice to his or her client's case, but is also likely to waste the time of the court and may by his failure bring about injustice. The ensuing delay, additional expense and inconvenience can affect not only the case in question but also other cases waiting their turn to be heard; and indeed the state of the law generally.

5.4 It is not only an advocate's competence which is important here; it is also the standards of integrity and ethical practice required of advocates which have developed over many years to ensure that the quality of justice is maintained. Judges need to be able to trust the word of the advocates appearing before them and to rely on them not to mislead the court; otherwise proof of every matter would be required, leading to unnecessary delay and inconvenience for all concerned.

5.5 It is also important to recognise that judges give judgments with reasons which can be used in other cases. Because of the doctrine of judicial precedent (under which decisions of the higher courts on matters of law are treated as binding on the lower courts), such judgments, particularly in the higher courts, play a vital role in the development of English law. It is for this reason that the judges look to the advocates appearing before them to cite all relevant authorities to the court, whether or not these authorities are favourable to their case. The presentation of cogent legal argument is a highly skilled task requiring not only a knowledge of the law but also constant practice in advocacy.

5.6 For these reasons it is necessary to ensure, in considering what the appropriate criteria are for granting rights of audience, that such rights are given, particularly in the higher courts, only to those who will not only give the right quality of service to the parties involved in a case, but who will also enable the quality of justice and the standards of advocacy to be maintained. Obtaining rights of audience

5.7 The Government considers that, for the reasons given above, rights of audience in the courts should be restricted to those who are properly trained, suitably experienced and subject to codes of conduct which maintain standards, although this should not affect an individual's right to self-representation. The Government therefore, as stated in Chapter 3, believes that advocacy in the courts should be an area where recognised professional expertise is required. Subject to that, the Government believes, in accordance with the principles set out in Chapter 1, that the public should have the widest possible choice among recognised advocates who are free to compete fairly with one another for the business available from clients.

5.8 Accordingly the Government believes that, for the future, rights of audience before particular courts should depend only upon whether advocates can demonstrate that they have the appropriate education, training and qualifications and are bound by appropriate codes of conduct. Advocates' professional bodies should have to satisfy the Lord Chancellor that their members are fit and proper people to appear as advocates before the court or courts in question in order to obtain rights of audience for them. The necessary requirements would vary, depending on the level and nature of the court concerned, and would need to be worked out in detail for each court, but the present distinctions in the treatment by the courts of the different branches of the profession would disappear. The basic premise is that the satisfaction of such requirements should, for the future, alone be the test for granting rights of audience; and not whether an advocate happened by initial qualification to be a lawyer, whether a barrister or a solicitor, and whether in private practice or employed.

Lay advocacy

5.9 Lay representatives already appear in a wide variety of proceedings; and the Government thinks that it may now be right for lay representatives to be granted rights of audience in the courts on behalf of others in some instances. The Civil Justice Review R.48 (Cm. 394) recommended that in small claims cases and debt and housing cases in the County Court, litigants should have the right to be assisted or represented by the lay representative of their choice, although the court, on giving reasons, would have the discretion to restrict the involvement of corrupt or unruly representatives, and, where necessary, to exclude them entirely. Any rights of audience granted to lay advocates would supplement, and not replace, the existing rights of those who represent themselves to have a friend in court who assists but does not represent them. In other instances, specialist practitioners who are not lawyers should be able to exercise rights of audience in perhaps a limited range of cases appropriate to their specialist expertise if they can satisfy the appropriate tests. The aim should be to ensure the widest possible choice of advocate for the client while at the same time ensuring that adequate standards of competence and probity are maintained. The whole area of lay representation should be considered by the Advisory Committee.

Employed lawyers

5.10 The Government also believes that it should be possible for appropriate codes of conduct to guard against any conflicts of interest which might arise in the case of employed lawyers; and to secure the degree of responsibility to the court and independence from the parties which is vital if the court is to rely on their representation. A universal prohibition on rights of audience for employed lawyers would therefore appear to be an unnecessary constraint.

5.11 In particular, in the case of prosecution work the Government endorses the principle recommended in the Report of the Royal Commission on Criminal Procedure (Cmnd 8092) published in January 1981 (the Philips Report) that there should be a clear separation of responsibility for the conduct of the prosecution from the conduct of the investigative process (paras 7.3 and 7.7). The Crown Prosecution Service, created in the wake of the Philips Report, clearly follows this principle since it is both independent of the police and accountable to the Attorney-General rather than the Home Secretary who has Ministerial responsibility for the police. The Government therefore considers that it is likely to be feasible as a matter of principle for lawyers employed by the Crown Prosecution Service to have rights of audience in all the criminal courts, provided that they can satisfy the appropriate advocacy requirements and undertake to abide by the relevant codes of conduct; and provided that it is adequately recognised by practical safeguards that their duty to the court must take precedence over any responsibility they may have to their employer.

5.12 So far as rights of audience for lawyers employed on prosecution work by other Government departments are concerned, and also for lawyers employed by other bodies which undertake prosecutions, consideration will need to be given to how they might meet the Philips principle, especially in the case of the more serious cases which are tried in the Crown Court, before any changes in their rights of audience are made. In the case of the prosecution work carried out by Government departments, departments would at least need to be able to demonstrate a clear structural separation in the arrangement of the department of those staff involved in investigations from those responsible for conducting prosecutions; and, in some cases, the solution might be to transfer responsibility for the lawyers who have carriage of prosecution work from the department concerned to the Attorney-General.

Role of the Advisory Committee

5.13 The Government proposes that the reconstituted Lord Chancellor's Advisory Committee on Legal Education and Conduct (see Chapter 3) should be responsible for advising the Lord Chancellor on the education, qualifications and training of advocates appropriate for each of the various courts. The Lord Chancellor should be required to consult the judiciary before reaching decisions as a result of advice tendered by the Advisory Committee, although the final decision would be for him. It would seem to be appropriate that decisions by the Lord Chancellor on rights of audience should be put into effect by means of subordinate legislation which is subject to Parliamentary control. This would provide the degree of direct Parliamentary control that would be appropriate in this important area, directly affecting, as it does, the public's access to the courts.

Advocacy certificates

5.14 The Government proposes, subject to any advice it might receive from the reconstituted Advisory Committee, that rights of audience for all advocates should be dependent on a certificate of competence. This certificate could be either full, entitling the advocate to rights of audience in all courts, or limited, entitling the advocate to rights of audience in only the lower courts. (See paras 5.24 to 5.33 below for further details of these certificates.)

5.15 The Government suggests that, in order to obtain a full advocate's certificate, those who wish to practise in all courts in England and Wales should need to: (a) undertake an appropriate academic course in law; (b) undertake a vocational course which includes advocacy training; (c) undertake practical training in advocacy; (d) obtain a limited certificate; and then (e) practise with a limited certificate for a certain period.

Progression to each stage should depend on a satisfactory completion of the previous one and an assurance that work is being completed to a satisfactory standard.

5.16 The Government envisages that advocacy certificates would be issued and, where appropriate, varied, suspended or revoked by the relevant supervisory professional bodies. The Lord Chancellor would decide, on advice from the Advisory Committee, and after consulting the judiciary, which professional bodies should be authorised to grant advocacy certificates. The Advisory Committee would be expected to be satisfied, before recommending that any professional body should be so authorised, that that body had adequate arrangements in operation both to ensure a practitioner's competence and to monitor his performance as a practising advocate. The Government suggests that it is in the public interest that a variety of professional bodies should be so authorised. Requirements for obtaining an advocacy certificate

Academic course in law

This is discussed in Chapter 3 and Annex C.

Vocational course

5.17 The basic advocacy course should include both theoretical and practical instruction in how to present a case. This practical instruction should be under the supervision of practising advocates and should take the form of demonstrations and role-playing exercises. The student would not attend court except as an observer during this stage of training.

Practical training

5.18 This stage of training would need to be undertaken by all student advocates wishing to acquire a limited advocacy certificate. The purpose of the training would be to introduce students to the world of actual practice and to enable them to gain first-hand experience of seeing how advocacy is conducted by practitioners in court. Students would each be required to be attached throughout this stage of training to an experienced advocate who would be responsible for teaching the student the tools of the trade and monitoring his or her progress. Students should have to keep log books in which they would record details of their training, which would be authenticated by the experienced practitioner to whom they are attached. Practitioners willing to take students ought to be certified as qualified to do so by their professional body. The length and method of this practical training and the criteria appropriate for identifying practitioners qualified to take students are matters on which the Advisory Committee will be invited to make proposals. The Government would nevertheless welcome views now on how these suggestions could be given practical effect.

5.19 The Government envisages that the practical stage of training is unlikely to last for less than six months. The Advisory Committee would need to suggest what proportion of this period should consist of actual experience of what happens in court. This experience would be gained by watching, taking notes of evidence and general assistance to the practitioner to whom the student is attached. The student would not have rights of audience in court at this stage, although it might be appropriate to encourage him or her to appear as a lay person in tribunals or in small claims cases in the County Courts. Students should be able to show, perhaps through their log books, that they have attended court for a minimum period with the practitioner to whom they are attached or with other suitable practitioners in each of the categories of case relevant to the particular certificate they are seeking.

5.20 The Government suggests that there should be three types of limited advocacy certificate: (a) general, covering both criminal and civil work; (b) criminal only; and (c) civil only. The majority of students would probably wish to seek a general certificate, but there would be some (for example, any who had already decided they wanted to follow a career in the Crown Prosecution Service) who would wish to seek only a criminal or, as the case might be, a civil certificate.

5.21 This would mean that those students wishing to acquire a limited general advocacy certificate would need to show that they had attended both criminal and civil cases for a minimum period. Those students wishing to acquire only limited criminal advocacy certificates would need to show only that they had attended criminal cases for a minimum period and those students wishing to acquire only limited civil advocacy certificates would need to show only that they had attended civil cases for a minimum period. In view of the kind of practice that it is envisaged would be allowed to a student after he or she had acquired a limited advocacy certificate (see paras 5.24-5.26 below), the student should be able to show that his or her court experience at this stage had included significant experience in the lower courts.

5.22 After a student had gained some general experience of practice the Advisory Committee might wish to consider obliging him or her to undertake a further short taught course in advocacy at this stage in order to consolidate what he or she learned at the vocational stage and experienced during his or her practical training.

5.23 On satisfactory completion of the practical stage of training, which should be confirmed by the production of a certificate signed by the supervising advocate, the relevant professional body would issue the student with a limited advocacy certificate which would be either general, covering both criminal and civil work, or restricted to either criminal or civil work.

Advocacy with a limited certificate

5.24 Those holding a limited advocacy certificate could be granted rights of audience in the courts listed in para 5.25. The Advisory Committee would be expected to advise on this in due course. Those with a limited general certificate would have rights of audience in all the courts listed; those with a limited criminal or civil certificate would have rights of audience only in criminal or civil cases, as the case might be.

5.25 It should be for consideration whether any particular proceedings concerning children, such as care, wardship and adoption, should be excluded from the scope of a limited advocacy certificate.

5.26 Subject to this point, the courts proposed are as follows: (a) the Magistrates' Courts - all proceedings; (b) Coroners' Courts; (c) the County Courts - all proceedings; (d) the Crown Court - all proceedings except jury trials; and (e) the High Court - (i) formal and unopposed proceedings; and (ii) proceedings in chambers.

5.27 For some advocates a limited advocacy certificate may be sufficient for the needs of their practice. For such advocates a full certificate will be unnecessary.

Advocacy with a full certificate

5.28 A full certificate would allow an advocate rights of audience in all courts in England and Wales either in all cases or else in only criminal or civil cases, as the case might be.

5.29 It will be for consideration by the Advisory Committee whether a short formal taught course at the end of the limited certificate period would be a useful requirement before a full advocacy certificate could be obtained. The contents of any such course would obviously depend on the type of full certificate sought, but such a course could for instance cover jury trials and the differences in procedure between the County Court and the High Court.

Full general certificate 5.30 To obtain a full general certificate an advocate would need to have held a limited certificate for a minimum period and within a set period of time to have completed a prescribed minimum amount of actual advocacy in the Magistrates' Courts, the County Courts and the Crown Court.

Full criminal certificate 5.31 Similarly, to obtain a full criminal certificate an advocate would need to have held a limited certificate for a minimum period and within a set period of time to have completed a prescribed minimum amount of actual advocacy in the Magistrates' Courts and the Crown Court.

Full civil certificate 5.32 Again, to obtain a full civil certificate an advocate would need to have held a limited certificate for a minimum period and within a set period of time to have completed a prescribed minimum amount of actual advocacy in the County Courts.

5.33 These time limits and the minimum amount of actual advocacy will be matters for consideration by the Advisory Committee, but they should recognise that the best test of competence in advocacy is an advocate's ability to earn a living by pleading in the courts.

Amendments to legislation and practice rules 5.34 A re-organisation of rights of audience on the lines suggested above would require amendment of both statutory provisions and rules of court. The Bar and the Law Society would doubtless also wish to amend their professional practice rules.

Transitional arrangements

5.35 The principle underlying the transitional arrangements should be that individual practitioners who already have rights of audience before the various particular courts, when the new arrangements come into force, should retain those rights. The new arrangements would be intended to apply only to those who qualified after the new arrangements come into operation. In addition, therefore, transitional arrangements would need to be made to ensure that those who can demonstrate that they already have long experience in a particular field of advocacy and who are currently practising in that field, but who may not be able to fulfil any new educational requirements for rights of audience, will nevertheless be able to obtain the appropriate rights of audience. This would be particularly likely to apply to solicitors who can show that they already have sufficient experience of practising advocacy in the relevant courts.

Transitional arrangements for barristers

5.36 All barristers who had completed their pupillages, when the new arrangements were introduced, would be granted full general advocacy certificates. Students called to the Bar or completing pupillage after the introduction of the new arrangements would be required to obtain the proposed advocacy certificates.

Transitional arrangements for solicitors 5.37 All solicitors in private practice, when the new arrangements were introduced, would be granted limited general advocacy certificates. Obtaining a full certificate thereafter would depend on whether a solicitor could demonstrate that he or she had satisfied the necessary conditions. The Advisory Committee would be asked to advise as an early priority what this should entail. As with barristers, students completing articles after the new arrangements were introduced would be required to obtain the necessary advocacy certificates.

Transitional arrangements for employed lawyers

5.38 Employed lawyers would be granted limited general advocacy certificates when the new arrangements came into force. An employed lawyer would need to demonstrate that he or she had satisfied the requirements for a full general advocacy certificate, in order to obtain one of these. The Advisory Committee would be asked to advise as an early priority what this should entail. Any employed barrister who had not done pupillage should for this purpose also have to show that he or she had met the requirements of the proposed new practical training, although this could be done under the supervision of a suitably qualified lawyer employed in the same organisation. Procedures for dealing with potential conflicts of interest would, of course, need to be in place before these changes could be made, as would arrangements to ensure the independence of lawyers having the conduct of prosecutions from those involved in the investigative process.

Transitional arrangements for others

5.39 All those who already had limited rights of audience when the new arrangements were introduced (see Annex E for examples) would be entitled to retain these. The Advisory Committee would be asked to advise as an early priority on the appropriate continuing arrangements for granting advocacy certificates to practitioners of these kinds after the new arrangements come into force.

Consultation

5.40 The Government would welcome views on the proposals for rights of audience set out above. Recent cases have established that an advocate, whether barrister or solicitor, is immune from an action for negligence at the suit of his or her client in respect of his or her conduct and management of a case in court. This immunity extends to the preliminary work connected with the hearing such as the drawing of pleadings and to pre-trial work where the act in question is intimately connected with the conduct of the case in court.

The main reasons for this immunity are that the administration of justice requires barristers and solicitors to be able to carry out their duty to the court fearlessly and independently and that actions for negligence against barristers and solicitors in respect of advocacy work would make the re-trying of the original actions inevitable and so multiply litigation. The Government accepts the cogency of these arguments and considers that this immunity from actions in negligence should in the future extend to all recognised advocates. CHAPTER 7 - ATTENDANCE ON COUNSEL

7.1 At present, except in proceedings in the Magistrates' Court, counsel is virtually always attended by a solicitor or their representative. The Code of Conduct of the Bar allows a barrister to appear unattended in any case in the Crown Court provided that he or she is satisfied that the interests of the lay client and the interests of justice will not be prejudiced. The Law Society's Practice Rules are less relaxed about allowing solicitors not to accompany barristers to court.

7.2 The criticism frequently levelled at a requirement for counsel to be attended in court is that it produces unnecessary double manning and therefore increased cost to the client. It must therefore be considered whether the requirement for a solicitor to attend on counsel or, in the light of the proposals outlined in Chapter 5, to attend on any advocate, can be justified.

7.3 The Government considers that the need for an advocate to be attended in court depends on the circumstances. In some cases attendance may be superfluous, but in others it may genuinely be difficult for an advocate to handle both the advocacy and the ancillary matters without assistance. In such cases it may well be an efficient and cost-effective use of time for an advocate to be attended.

7.4 Accordingly, the Government considers that those who are paying for in-court work should be allowed to decide whether assistance in court is required. Any specific requirement, however, in professional practice rules that an advocate must be attended would appear to be unjustifiable. CHAPTER 8 - DIRECT ACCESS TO COUNSEL

8.1 Two separate, but related, issues are considered in this chapter: the question of contractual relationships between counsel and those who instruct them and the question of who can instruct counsel.

Contractual relations

8.2 It has long been established by case law that there is no contractual relationship between barristers and those who instruct them. A barrister therefore has to recover his or her fees by other means. One way of doing this is an arrangement such as the Bar has with the Law Society whose rules provide that, except in legal aid cases, a solicitor is personally liable as a matter of professional conduct for the payment of counsel's proper fees, whether or not he or she has been put in funds by the client.

8.3 The Government considers that these arrangements are anachronistic. The Government notes that the Bar has not thought it appropriate to adopt this approach to practice overseas and that the Overseas Practice Rules of the Bar (see Chapter 11 para 11.24) allow a barrister to negotiate fees directly with non-UK clients for non-UK work and to enforce payment. The Government accordingly proposes that there should be legislation to permit barristers who wish to do so to enter into contractual relations with those who instruct them in respect of UK work.

Direct access

8.4 The further question for consideration is who those instructing parties should be. At present, in accordance with the professional rules of conduct set out in the Bar's Code of Conduct, a barrister may accept instructions only from solicitors or, in some circumstances, from parliamentary agents, patent agents, trade mark agents, London notaries, licensed conveyancers, the Government legal service, the legal departments of local or public authorities and employed barristers. The Bar has announced recently that it intends to allow direct access from other professions such as accountants in early 1989 although direct access from the lay public continues to be prohibited. In addition, it is to be noted that the Overseas Practice Rules of the Bar provide that a barrister may:

(a) accept instructions from a foreign lawyer for non-UK work; (b) accept instructions from any UK lay client for non-UK litigation or arbitration; and (c) accept instructions from a non-UK lay client for non-UK work.

For many, if not most, barristers, the major part of their practice seems likely, notwithstanding the proposals elsewhere in this Green Paper, to continue to be advocacy and the preparation of cases for court. Advocacy is a skill which requires regular and frequent practice if high standards of performance are to be developed and maintained. Indeed advocates, who under the present arrangements depend for their livelihood upon the continuing approval of solicitors, who are their independent professional clients, find that it is only in this way that they can maintain a successful practice as advocates. Advocates may therefore wish to choose to accept instructions only from other professionals who have the expertise to identify the issues and sift out the relevant facts for them; and to concentrate themselves on maintaining their practice and performance as advocates. Moreover, the majority of solicitors, particularly those who practise in small firms or in areas distant from any major court centre, are likely to continue to find that it suits the nature of their business not to practise regularly as advocates themselves, but rather, as they do now with much County Court and Magistrates' Court work, to instruct those whose full-time occupation is advocacy to take their in-court work for them.

At present the Government thinks that in the future advocates should themselves have the discretion to decide, in the light of the nature of their practice, whether they wish to take instructions directly from lay clients or to restrict themselves to taking instructions only from other professionals. Moreover, in order to promote the use of their services, advocates who choose only to take instructions through other professionals, should be entitled, if they so wish, to belong to a voluntary association, one of whose characteristics might be that its members take instructions only in this way, although they would need to be able to demonstrate in due course to the competition authority that this was not operating in an anti-competitive way. They could also advertise their membership of such an association to those instructing professionals, such as solicitors, who are likely to want to continue to use their services. The prime examples of such bodies are currently the four Inns of Court, who compete with each other by means of their scholarships, libraries and other collegiate facilities to attract new entrants to the profession to their membership. Other examples might in the future develop on the lines of one or more of the specialist Bar Associations. There is, however, an argument sometimes advanced, which is set out in this paragraph, that to grant to advocates, who practise in the higher courts, the right to have direct access to the lay client might lead to fundamental changes in the structure of the legal profession, which would reduce the extent of informed choice currently available to the lay client through his solicitor; and would lower the standards of advocacy to which the courts have become accustomed. This argument is that, whereas there are currently some 50,000 solicitors who have available to them the specialist services, both in advocacy and other specialisms, of some 5,500 members of the independent Bar, the right to direct access might lead more and more advocates to attach themselves, as "trial lawyers", to firms of solicitors, or to set themselves up as advocates taking their clients direct from the public. The result, it is said, could be that there might be a serious contraction of the corps of independent advocates available to all solicitors, and an increasing practice amongst lawyers of all kinds to choose their own in-house specialist or trial lawyer in preference to the independent specialist best suited to the needs of the particular case. If this happened to any serious extent, the result, it is suggested, could be that the choice of advocates available to all clients would be substantially reduced.

The Government, however, hopes and expects that a free market for the provision of independent advocacy services will flourish. Certainly the extent and variety of the present demand for advocacy leads the Government to believe that this will be so. Empirical evidence from other common law jurisdictions and the present success of English barristers in obtaining work abroad, especially in Europe, suggest that specialist advocates who act only as such and do not become involved in pre-advocacy case work are well able to flourish in the market place in direct and open competition with other lawyers who do not act exclusively as advocates.

Consultation

8.9 The Government would welcome comment on the principles set out in this chapter; and on whether its views, and its proposals in the light of English barristers' experience in other common law jurisdictions and in Europe, meet the criteria endorsed in Chapter 1. Barristers have historically been divided into junior Counsel and Queen's (or King's) Counsel. The first King's Counsel were appointed by the Crown at the end of the sixteenth century in order to assist the law officers of the Crown. By the eighteenth century appointment had come to be regarded as a mark of pre-eminence in the profession. Today Queen's Counsel comprise about 10 per cent of the practising Bar.

Queen's Counsel ("QCs" or "Silks") are appointed by the Queen on the advice of the Lord Chancellor. Practitioners who wish to be considered for appointment are invited to submit their names to the Lord Chancellor. Following wide consultation with the judiciary and the profession, the Lord Chancellor then settles the list of names to be recommended to the Queen.

In the past the Bar had a rule that a QC could appear in Court only if a junior also were instructed. That rule has now gone. A QC may, however, decline to appear without a junior, if he considers that the interests of the client require that a junior also should be instructed. He may also decline instructions to advise or draft a non-contentious document without a junior, if he considers that the interests of the client require that a junior also should be instructed.

Critics of the system say that it is inflationary because QCs' charges are unnecessarily high, and because juniors are still unnecessarily instructed. It has therefore been suggested in some quarters that the system no longer serves any useful purpose, and that it should be abolished. Against that, the Government considers that the retention of a two-tier system of advocates is justified. Appointment to the rank of QC is made only after very wide consultation by the Lord Chancellor. It thereby:

(a) enables both lawyers and clients to identify the leading members of the profession, and thus to exercise a more informed choice about the competence of the advocates whom they are choosing than they would otherwise have been able to do;

(b) acts as an incentive for advocates to strive to achieve and maintain excellent standards; and

(c) helps the Lord Chancellor to identify at an early stage those who are likely in due course to be candidates for the High Court Bench, and for other forms of public service such as inquiries into disasters.

The Government considers, in the light of the proposals in Chapter 5 on rights of audience, that in future all who hold full general advocacy certificates, whether or not they are barristers, should be treated as eligible for appointment as Queen's Counsel. The present practice whereby Silk is occasionally given, normally on an honorary basis, to people who are not practising advocates, for example distinguished academics, also need not be disturbed, although such honorary appointments need not in future be restricted to those who happen originally to have qualified as barristers. Appointment to Silk is not controlled by statute, so no legislation would be required to achieve this. In the Government's view, however, any professional practice rules about access to or representation by Silks or about the relative size of payments to Silks and other lawyers appear to be difficult to justify. This will be a matter for the proposed new competition authority.

Summary

The Government proposes that in future those treated as eligible for Silk should be:-

(a) all those who hold full general advocacy certificates; and

(b) on an occasional and honorary basis, lawyers who are not practising advocates, whether or not such lawyers are barristers. CHAPTER 10 - THE JUDICIARY

Summary

10.1 The Government proposes that all advocates who have held the relevant advocacy certificates for the appropriate length of time should in future be eligible for judicial appointment; and in addition that judges in a lower court should be eligible for promotion to a higher one on the basis of their judicial experience in the lower court.

Basis of judicial appointments

10.2 A strong and independent judiciary is one of the central supports upon which our liberties are based and upon which the rule of law depends. Moreover, our adversarial method of administering justice requires the judges at least at trial courts to be recruited on the whole from among seasoned advocates. It is, therefore, important that the ablest practitioners should have in their sights some aspiration towards judicial work at the end of their careers in professional practice. No one should be excluded, by virtue of the fact of choosing one branch of the profession rather than another, from reaching the highest judicial office. Over time, the increased competition will enable the Lord Chancellor more easily to maintain the highest standard of appointments. The Government therefore proposes that, in future, all those who have held an advocacy certificate for an appropriate minimum period for the courts covered by any particular judicial office should be eligible for appointment to that office. As now, legal eligibility will not of course guarantee appointment. In particular, the Lord Chancellor sees no reason to change the now well-established policy of requiring satisfactory part-time judicial service as a condition of full-time judicial appointment. The Appellate Jurisdiction Act 1876 provides that the qualification for appointment as a Lord of Appeal in Ordinary is that the individual:-

(a) has for at least two years held the office of Lord Chancellor or of Judge in one of Her Majesty's Superior Courts in Great Britain and Northern Ireland; or

(b) has been for not less than 15 years a practising barrister in England and Wales or Northern Ireland or a practising advocate in Scotland.

Although the Lords of Appeal in Ordinary are usually appointed from among the judges of the superior courts, the Government proposes to amend (b) above to remove the reference to a practising barrister and to refer instead to anyone who has held a full general advocacy certificate for at least 15 years. The Scottish position will be considered separately.

Under the present legislation some senior judicial offices are not open to solicitors; others, although open to solicitors, impose upon them criteria for eligibility which do not apply in relation to barristers. Solicitors are not eligible for appointment as Lords Justices of Appeal, Heads of Division, High Court Judges or Deputy High Court Judges. Although solicitors can now be appointed as Circuit Judges, they are required, unlike barristers, to have served for a period of at least three years as Recorders before appointment. Section 9(1) of the Supreme Court Act 1981 does, however, provide that the Lord Chancellor may request a Circuit Judge to sit as a judge of the High Court, so that solicitor Circuit Judges may by this means be requested to sit as High Court Judges from time to time.

(a) Judicial promotions

10.5 At the time of the Parliamentary passage of the Supreme Court Act 1981, an attempt was made to amend the provisions of the Bill so as to provide that any Circuit Judge could be eligible for appointment to the High Court. This would have meant that solicitors could, by that route, have reached the High Court. This move was resisted at the time, substantially on the basis that it was considered that only practice as an advocate in the High Court equipped anyone to sit judicially in that forum. Because solicitors did not have a right of audience in the High Court, they could, therefore, it was argued, never acquire the relevant experience.

10.6 It is doubtful whether the arguments which were successful in 1981 still carry conviction. A successful career as an advocate in the High Court is an excellent way of training an individual to sit judicially in that court, but it does not necessarily follow that advocacy and advocacy alone in the higher courts should be the only route to a judicial career in these courts. Judicial experience seems an equally acceptable qualification; and it seems today an unjustifiable constraint that a solicitor Circuit Judge, whatever his or her merits, can never be promoted to the High Court. If the law were changed to permit the Lord Chancellor to recommend the promotion of solicitor Circuit Judges to the High Court, there would, of course, be no obligation on him to do so. He would continue, as now, to choose the best available candidate for each individual post, but the pool from which he could make that choice would be beneficially enlarged.

(b) Direct appointments

10.7 What is now recommended for the development of the profession (see Chapter 5) will in due course create a class of advocates in the superior courts who may be either barristers or solicitors or lawyers who are neither. A wider question therefore arises whether it can be right to limit eligibility to direct appointment to judicial office in these courts to one side of the profession or the other. It does not appear to be logical to do so. Rather, eligibility for appointment to the Supreme Court and Circuit Bench should be determined by reference to whether any individual practitioner has had the necessary experience as an advocate in the relevant court.

(c) The Government's proposals

10.8 (i) The Government therefore proposes that there should in future be two ways to establish eligibility for a Supreme Court appointment. The first would be by having held a full general advocacy certificate for a minimum period, probably 10 years; and the second would be by having held office as a Circuit Judge for a minimum period, perhaps 2 years. All those who had held a full general advocacy certificate for the minimum period should be eligible also to act as Deputy High Court Judges.

(ii) All those who had held a full general advocacy certificate, or at least either a full criminal and a limited civil or a full civil and a limited criminal advocacy certificate, for a minimum period, probably 10 years, should be eligible for appointment to the Circuit Bench. In addition, a Master or Registrar or equivalent judicial officer who had held office for a minimum period, perhaps 2 years, should be eligible for appointment as a Circuit Judge. The present requirement that solicitors must serve as Recorders for a minimum of 3 years before appointment to the Circuit Bench should be removed. The criteria for appointment as a Recorder or Assistant Recorder should be changed in line with those for appointment as a Circuit Judge.

(C) Masters and Registrars

10.9 Only solicitors of at least 7 years' standing are at present qualified for appointment as County Court Registrars (section 9 of the County Courts Act 1984). The Civil Justice Review recommended that barristers also should be eligible for appointment as County Court Registrars (rec 14); and there has been no subsequent objection to this proposal. In addition, since the Supreme Court Act 1981 both solicitors and barristers have been eligible for appointment as Masters and Registrars in all branches of the High Court.

10.10 The Government now proposes, in line with its general approach to the judiciary, that in future any person who has held at least a limited civil advocacy certificate for a minimum period, probably 7 years, should be eligible for appointment as a High Court Master or Registrar or as a County Court Registrar. Obviously advocates who had held full civil or full or limited general certificates for an equivalent minimum period also would be eligible for appointment. These eligibility conditions would be applied also to part-time appointments, since a number of advocates might wish to practise part-time as advocates and to sit part-time as Registrars.

(D) Other appointments

10.11 This chapter has discussed only the main judicial appointments at each level. There are also various other judicial appointments, particularly at the lower levels, where the eligibility provisions will need to be amended in line with the approach set out in this chapter.

Transitional arrangements

10.12 The following transitional arrangements seem appropriate:

(a) Barristers All barristers who had been called when the new arrangements came into force, would be eligible for all appointments for which they are at present eligible, provided they were of or achieved the standing required by the present law. In addition they would become eligible for appointment as County Court Registrars, again provided they were of or achieved the required number of years standing.

(b) Solicitors All solicitors who were on the roll when the new arrangements came into force would be eligible for all appointments provided:

(i) in the case of appointments to the House of Lords and the Supreme Court, they were of or achieved the standing now required for barristers and acquired the necessary full advocacy certificate; (ii) in the case of appointments to the Circuit Bench, they were of or achieved 10 years' standing; and

(iii) in the case of appointments as Masters and Registrars, they were of or achieved 7 years' standing.

Conclusion

10.13 In conclusion, therefore, it is proposed that:

(a) any person who has held a full general advocacy certificate for at least 15 years should be eligible for appointment as a Lord of Appeal in Ordinary (the existing provision for the appointment of serving judges would remain);

(b) any person who has held a full general advocacy certificate for at least 10 years or has been a Circuit Judge for at least 2 years should be eligible for appointment to the Supreme Court;

(c) any person who has held a full general advocacy certificate for at least 10 years should be eligible to act as a Deputy High Court judge;

(d) any person who has held a full general advocacy certificate, or at least either a full criminal and a limited civil or a full civil and a limited criminal advocacy certificate, for at least 10 years should be eligible for appointment to the Circuit Bench;

(e) any person who has been a Master or Registrar or an equivalent judicial officer for at least 2 years should be eligible for appointment to the Circuit Bench;

(f) the provision whereby a solicitor must serve for a minimum of 3 years as a Recorder before becoming eligible for appointment to the Circuit Bench should be removed;

(g) the criteria for appointment as a Recorder or Assistant Recorder should be changed in line with those for a Circuit Judge; and

(h) any person who has held at least a limited civil advocacy certificate for at least 7 years should be eligible for appointment as a High Court Master or Registrar or as a County Court Registrar. CHAPTER 11 - BARRISTERS' PRACTICES

Introduction

11.1 The internal rules and methods of organisation which govern barristers' practices are a matter for the Bar, although it will need to be able to justify these to the new competition authority which it is envisaged will be set up in accordance with the Government's proposals set out in the consultation paper "Review of Restrictive Trade Practices" which was published by the Department of Trade and Industry in March 1988. The purpose of this chapter is to examine existing arrangements for barristers' practices in the context of the criteria of quality of service, efficiency, and competition set out in Chapter 1 of this paper, and against the background of the need to protect the interests of clients. As a starting point for that examination, this chapter sets out a number of areas in which the existing arrangements for barristers' practices might benefit from closer scrutiny.

Main areas of concern

11.2 Every barrister who wishes to set up in practice must first go through a period of pupillage. He must then:-

(a) become a member of chambers i.e. obtain a tenancy; (b) practise only as an individual; and (c) have the services of a clerk.

11.3 These special requirements of the Bar have been criticised on the grounds, first, that it is often very difficult for new barristers to get themselves into a position where they may set up in practice, and, secondly, that the practice requirements are themselves unnecessarily restrictive.

Pupillages 11.4 The Bar has a policy that anyone who wishes to enter pupillage should be allowed to do so. The present system of pupillage allocations, however, has been criticised as unsatisfactory, on the grounds that it operates haphazardly and unfairly, particularly to the disadvantage of minority groups. Although some chambers already advertise for pupils, the Bar, in response to these criticisms, is at present considering the establishment of a central information base from which prospective pupils and tenants may find out easily what and where vacancies exist. It is also considering a register of approved pupil masters and a wider range of pupillages, which take more account of the needs of central and local Government, commerce and the EC.

11.5 The Government expects the Bar to ensure that pupillages are allocated in the most efficient and fair way possible.

Tenancies

11.6 Even greater difficulties can be experienced by those who wish to set up in practice, since this entails obtaining a tenancy in chambers. Although no reliable figures are available, it seems that only between 50% and 65% of those completing pupillage obtain a tenancy. Even though not every new barrister wishes to set up in independent practice, this still gives cause for concern. Moreover it cannot be assumed that those who do at present obtain tenancies are on the whole the best barristers, since it still appears to be difficult for a barrister to obtain a tenancy in a set where he has not obtained pupillage. The successful pupil in one set may not be as good as an unsuccessful pupil in another set. 11.7 The Government expects the Bar to introduce a more competitive system, covering all chambers, which will result in tenancies being granted on a more open and fair basis in all cases.

Chambers

11.8 The underlying cause of difficulty arises from the present rule that a barrister must practise from approved chambers, coupled with the shortage of accommodation in the Inns of Court, which is where the overwhelming majority of barristers in London choose to practise. It is absurd that entry to a profession depends on whether a person can obtain accommodation.

11.9 There is in fact no requirement that a barrister should practise from any particular place, but a barrister who wishes to open chambers in central London, otherwise than in premises owned or managed by the Inns, must apply to the Bar Council for consent. A barrister who wishes to open a set of chambers on Circuit must apply to the Circuit for permission. The criteria used by the Bar when it considers applications include the suitability of the applicant, of the clerk and of the premises and their location. It is, however, expressly provided that lack of need cannot be a valid ground for refusal, presumably so that leave cannot be refused because of a fear of possible competition.

11.10 The Government believes that the present requirements that a barrister must practise from approved chambers and that consent must be obtained from the Bar before chambers are opened outside the Inns are unnecessarily restrictive and not needed to protect either the barrister or the client. There is no obvious reason why barristers ought not to be allowed to practise where they choose. 11.11 The Government accepts that most barristers may continue to prefer to set up in chambers. As a consequence, any improvement to the present accommodation problem will largely depend on members of the Bar in London being more ready to set up chambers outside the Inns. Although there was once a financial advantage in having chambers in the Inns, because rents were lower than rents outside, this is less so now because the Inns are increasingly charging market rents. Some sets do, however, appear to prefer to remain in cramped accommodation for reasons other than the costs of accommodation outside. Proximity to other barristers, to the Inns' facilities and to the Courts are cited as factors. There are also those who are anxious that solicitors will not instruct them if they are in practice outside the Inns, because lay clients will not regard them as sufficiently prestigious.

11.12 There are already sets of chambers which have set up and survived outside the Inns. Indeed it is probably not necessary to go far away to find suitable accommodation. In any case, the traditional wish to be near the Royal Courts of Justice, because of the convenience of easy physical access, will be of less significance with the continuing development of information technology. The Government is also aware that the Inns themselves are now beginning to tackle the problem. In June 1987 the Inns Council resolved that the Inns should as far as possible, and in cooperation with one another, provide sufficient accommodation whether within or if necessary outside the precincts of the Inns of Court to house the practising Bar in London. In May 1988 the Vice-Chairman of the Inns Accommodation Committee invited those Chambers prepared to move out to let him know. The Government welcomes this approach but suggests that it should be made in a more positive manner. The Government considers that the profession should take active steps to find suitable accommodation for barristers outside the Inns.

Partnerships

11.13 Barristers are not permitted to practise in partnership. A set of chambers therefore consists of a number of sole practitioners practising within the same premises. The Head of Chambers is required to ensure that the chambers function properly. In recent years there has been an increasing tendency for sets to establish committees of barristers responsible for matters such as pupillage, recruitment and management. There are now also often chambers meetings of all members. In addition the Bar now permits fee-sharing agreements. It may be wondered why the Bar does not simply permit partnerships.

11.14 This is a question which has often been considered by the Bar over the years. The principal argument by those against appears to be that it would severely restrict client freedom of choice because one partner may not act for a client if his partner acts for an opposing client. This is a consequence of section 5 of the Partnership Act 1890, which makes one partner responsible for the acts and defaults of the other partner. If partners acted for opposing sides in a case they would therefore be subject to a conflict of interest. It would also be wrong for partners to have a financial interest in both sides of a case. The same considerations prevent different members of the same firm of solicitors from acting for opposite sides in a case. The Government would welcome comment on whether these problems are insurmountable; or whether there might be ways to meet the point about conflict of interest, which would enable partners to act for opposing sides in a case.

11.15 The Government believes that it ought to be for individual groups of barristers to decide what is best for themselves, although it thinks that, particularly in areas of specialised practice where there are only very few sets which can offer the necessary expertise, barristers are very likely to decide for themselves that partnership is not a practical proposition. In other areas it may be.

11.16 Partnership could offer barristers some advantages over their present system. In particular it could:-

(a) permit increased financial stability for a set of chambers;

(b) improve the financial position of the new entrant;

(c) encourage proper supervision of work undertaken by the new entrant; and

(d) ensure greater office efficiency.

11.17 The Government thinks that barristers should be permitted to operate in partnerships if they choose to do so, although it recognises that for many this may not be a preferred option. The Government believes that the risk of diminishing clients' choice, whether in specialist fields of law or in the smaller circuits outside London, is outweighed by the advantages of greater efficiency and of easing the entry of new barristers into the profession. Any risk of diminution of clients' choice will be met by the fact that the forces of competition can be expected to fill naturally any gaps in the provision of advocacy services.

Incorporation

11.18 Since some chambers have already formed companies for the ownership of common assets, the Government thinks barristers should probably also be permitted to operate in corporate form if they so choose, although this should not affect the personal responsibility of individual practitioners for their client's cases. Safeguards would be needed to ensure that clients remained adequately financially protected, if barristers wanted to form limited liability companies.

Employment of others

11.19 There also seems to be no reason why barristers should not be able to employ others to assist them with their legal work, including other barristers (subject to rules about conflicts of interest).

Clerks

11.20 The functions of a barrister's clerk have been described as:-

(a) office administrator and accountant;

(b) business manager; and

(c) agent.

11.21 His role in a barrister's life is a powerful one because of the rule that every barrister must have a clerk and because of a further rule that the solicitor must normally negotiate with the clerk rather than the barrister about fees. In addition the organisation of members of chambers as a collection of individuals rather than a partnership may impede their collective control over their clerk.

11.22 Clerks have been criticised as having too much influence over the careers of members of chambers and as earning too much because traditionally they have been paid entirely by commission out of the barristers' fees. These features may today already be diminishing. As indicated above, chambers management is increasingly coming under the control of committees; and clerks are tending more and more to receive salaries plus either incentives to reward results or smaller commissions.

11.23 Of more significance are the professional rules that every barrister must have a clerk and that he should normally negotiate the barrister's fees. Barristers will naturally need to have office staff to organise their practices, but this should be a matter for them alone to settle. Accordingly the Government agrees with both Benson and Marre that barristers should not be compelled to have a clerk. Rather they should be able to negotiate their own fees, if they so wish. Moreover, they should simply be under a professional duty to ensure that their own particular practices are managed in an efficient and effective manner.

11.24 It should be for individual barristers or chambers to decide what system of managing their practices is most suitable for them. It will be of increasing importance for barristers to be able - as Marre pointed out - to tailor the organisation of their practices to meet the demands of the commercial and international sectors. In particular, the Bar needs to make use of modern business methods and information technology. The recent report by BDI Binder Hamlyn on chambers administration, for example, concluded that staff structures and management techniques in barristers' chambers were inadequate; and the Government hopes that the Bar will encourage its members to implement the recommendations in that report.

Other restrictions

11.25 This chapter has sought only to indicate those areas of barristers' practices which give particular concern. The Government hopes that the Bar will examine all their rules carefully to ensure that they do not impose unnecessary or unhelpful restrictions. For example it should also be considered whether:-

(a) the rule that every barrister (other than one whose chambers are in London) should be a member of a Circuit or a specialist association serves any particular purpose; and

(b) the rule that conferences should normally be held in chambers or in some place other than a professional client's office tends to increase expense rather than protect the integrity of the barrister.

Overseas practice

11.26 In striking contrast to the rules on practice in England and Wales, the Bar's rules on overseas practice for barristers are much less restrictive. For example, barristers:-

(a) can accept instructions direct from any UK lay client for non-U.K. litigation or arbitration, or from non-U.K. lay clients for non-U.K. work; (b) can negotiate fees directly with these clients and enforce payment;

(c) can employ outside the U.K. any person who is not a solicitor practising in England and Wales;

(d) can practise without a clerk; and

(e) can enter a partnership with any other lawyers except practising U.K. solicitors.

11.27 No doubt this more relaxed approach was prompted by commercial necessity, but presumably the Bar would not have made these rules if it thought the professional integrity of barristers would suffer as a consequence. It is difficult to see why the position would be different if the same approach were followed in England and Wales.

Summary

11.28 The Government considers that the Bar needs to make changes on the lines mentioned above in order to ensure that barristers' practising arrangements do not hinder the provision of legal services to the public in the most effective, efficient and economical ways. The areas requiring particular consideration are:-

(a) obtaining pupillages; (b) obtaining tenancies; (c) the requirement to practise as a member of chambers; (d) the restrictions on partnerships; (e) the possibility of allowing incorporation; and (f) the functions of barristers' clerks. CHAPTER 12 - MULTI-DISCIPLINARY AND MULTI-NATIONAL PRACTICES

(A) Multi-disciplinary practices

Present Position

(a) General

12.1 At present solicitors and barristers are both prevented by practice rule or code of conduct from practising in conjunction with members of any other profession. The Law Society Practice Rules prohibit a solicitor from sharing fees with an unqualified person (i.e. anyone not a solicitor). As far as contentious business is concerned, this prohibition has statutory backing from the combined effect of section 39 of the Solicitors Act 1974 and section 5 of the Partnership Act 1890. It is also arguable that section 22 of the Solicitors Act has a similar effect in respect of conveyancing services. Barristers are particularly constrained in that they are required by the Bar's Code of Conduct to practise only as individuals, which thus prevents them, unlike solicitors, even from practising in partnership with each other.

(b) Solicitors

12.2 The traditional limitation to sole practice, or partnership only with other solicitors, of the way in which solicitors may organise their business reflects the profession's concern to maintain the independence and the role of the solicitor as an officer of the court, and to avoid conflicts of interest. It has been argued that such limitation is necessary to preserve:

(a) the personal and fiduciary relationship between solicitor and client;

(b) the safeguards afforded to clients by the high standards of ethics and expertise of the profession, supported by its requirements in respect of professional indemnity insurance, compensation and accounting for clients' money, and its provisions for handling complaints and maintaining professional discipline;

(c) legal privilege of communications between solicitor and client; and

(d) the proper carrying out of functions reserved by statute to solicitors.

Supporters of this view are apprehensive that the maintenance of solicitors' independence and high standards of conduct might come into conflict with their duties to colleagues in a multi-disciplinary practice, since those colleagues would be subject to the different codes of conduct of their own professions. Some solicitors have also expressed concern that multi-disciplinary practices might unfairly attract business away from solicitors' practices, and that this, particularly if it led to the development of large mixed practices, would so decrease the number of solicitors in private practice as to reduce significantly the public's freedom to choose between a wide variety of sources of legal services.

Arguments for change

12.3 Against that, it has been argued that the prohibition of multi-disciplinary practices is a significant restriction on the freedom of solicitors to conduct their business, which may be expected to result in higher costs to clients, less efficient use of resources, discouragement of new developments, and a tendency towards rigidity in the structure and methods of solicitors' businesses. Proponents of this view see advantages to both solicitors and the public if multi-disciplinary practices were allowed. They consider that this would enable solicitors to:-

(a) compete more effectively with other professions and businesses which can and do include legal advice among the services they offer;

(b) meet more comprehensively the demand for overlapping services from, for example, house buyers and commercial clients; and

(c) adapt to the changing conditions of demand for professional services, without either having to employ artificial devices to avoid breaching practice restrictions or being unable to reward with partnership status senior employees from other professional disciplines, including foreign lawyers.

Many other professions, such as accountants, surveyors, engineers and architects, permit multi-disciplinary practices and their professional bodies have evolved rules governing their operation. No significant problems have been reported in relation to these practices.

The public, they believe, would benefit from the greater flexibility which solicitors would enjoy through efficiency gains, improved channels of communication between the professions, and an increased choice of legal services between independent solicitors and practices providing a range of services. They argue that the risks of multi-disciplinary practices have been overstated in that:- (a) the choice between small practices offering a close personal relationship between solicitor and client and larger practices where there is a greater degree of delegation already exists; multi-disciplinary practices would do little to narrow that choice (particularly if, as expected, only a minority of solicitors would opt for mixed practice);

(b) some solicitors' firms are already organised to provide a range of services by employing specialists in other disciplines without any diminution in standards of conduct; and

(c) safeguards can be devised which would provide protection to clients of multi-disciplinary practices similar to that afforded to clients of solicitors' practices.

History 12.5 The question whether solicitors should be free to engage in practice with other professions was discussed by the Royal Commission on Legal Services (the Benson Commission) in 1979 and the Royal Commission on Legal Services in Scotland (the Hughes Commission) in 1980. Both Commissions considered the restriction in the light of its capacity to protect the interests of the public and enhance the level of legal services available to the public. The Benson Commission decided that the balance lay in favour of maintaining the restriction. They acknowledged the potential convenience of joint provision of overlapping or closely connected professional services; but they concluded that demand was limited, cost savings were questionable, client choice might be limited, and that practical difficulties would stand in the way of producing a common code of conduct for mixed partnerships. The Hughes Commission took the opposite view. They thought the risk of diminishing clients' choice of professional adviser would be small and would be outweighed by the prospect of cross-fertilisation of advice and greater access for clients to different professional groups; and they thought the problems of which professional bodies' rules should apply to mixed partnerships could be resolved by discussion between professional bodies. Although they found little demand at that time for development of multi-disciplinary partnerships, they could see no good reason for preventing their development at all; and they recommended removal of the statutory ban on Scottish solicitors sharing fees with others.

Recent developments

12.6 In 1986, the Director General of Fair Trading reported on a review, which he had undertaken at the request of Ministers, of restrictions on the kind of organisation through which members of the professions might offer their services. The Director General noted the course of debate about multi-disciplinary practices involving solicitors since the reports of the two Royal Commissions. He supported the view that such mixed practices should be encouraged, with suitable safeguards for the maintenance of professional standards and adequate consumer protection. He therefore recommended that Ministers should consider amendment of the Solicitors Acts to remove statutory prohibitions on solicitors sharing fees with non-solicitors, and of any other statutory provisions which might prevent solicitors from entering into partnership or any other form of association with members of other professions. He pointed out that legislation to this effect would be a necessary precursor to corresponding alteration of the practice rules of the Law Societies.

12.7 In November 1987 the Scottish Home and Health Department issued a discussion paper on the Practice of the Solicitor's Profession in Scotland, which stated that it seemed to the Secretary of State that the weight of argument was clearly in favour of permitting mixed practices of solicitors and other professions. The paper invited observations in the light of which the Secretary of State would further consider his initial view that sections 26 and 27 of the Solicitors (Scotland) Act 1980 should be amended so as to permit the Law Society of Scotland to allow mixed professional practices. The Secretary of State is at present considering the responses to the discussion paper.

The Government's view

12.8 The Government considers that the range of choice available to users of legal services in England and Wales should not be limited unless there are strong public interest reasons to the contrary, and that restrictions on competition between solicitors should be no greater than is necessary adequately to safeguard the interests of their clients. In the light of this and the Director General's recommendation, the Government proposes to amend the Solicitors Act 1974 to remove any statutory inhibition on the freedom of solicitors in England and Wales to engage in multi-disciplinary and multi-national practices. The Government expects the Law Society to amend its Practice Rules in the same way. Once the statutory restrictions have been removed, the Law Society (or any other professional body) would, of course, have to satisfy the competition authority that any remaining restrictions they imposed were not unnecessarily anti-competitive.

**Safeguards**

12.9 The question therefore arises of how to maintain high professional standards so as properly to safeguard the interests of clients who seek legal services from multi-disciplinary practices. This is primarily a matter for the Law Society to consider in addressing what changes would be required to its Practice Rules and guidance on solicitors' conduct. The rules of the Council of Licensed Conveyancers already permit licensed conveyancers to practise in partnership with other professions, subject to the Council's decision as to the suitability of the other professions concerned. These rules might provide the Law Society with a model on which to work. There appears to be no reason why mixed practices should be possible only in the partnership form; a corporate structure (which solicitors in England and Wales will shortly be enabled to employ, as Scottish solicitors now can), even one where solicitors did not control the ownership of the company, could equally provide the vehicle.

12.10 The essential need is to provide the same level of safeguards as presently exist in respect of solicitors' practices. One approach would be through discussions between the Law Society and other professional bodies with a view either to agreeing a common code of practice or to harmonising relevant aspects of different professions' codes of practice. The Government notes the steps that the Law Society has recently taken to arrange discussions and hopes that these will come to a speedy and successful conclusion. In either event, the Government considers that other professional bodies should, if necessary, add to the requirements imposed upon their members to bring them up to the standards of client protection of the Law Society - at least for those who opt to practise jointly with solicitors - on the principle of aiming for the highest common factor.

12.11 Ultimately, however, the maintenance of standards and safeguards in any profession depends on each of its members taking personal responsibility for observing its rules and codes of conduct, and on his or her professional body having effective disciplinary procedures to enforce observance where necessary. The Government therefore considers it essential that each member of a multi-disciplinary practice should remain individually subject to the rules of his or her professional body. The central principle must be that each member should remain personally responsible for the activities of the practice within their own professional field and should personally control the work involved, particularly in respect of functions reserved by statute to any particular profession. It will therefore be essential for a solicitor's personal responsibility to his or her profession as a lawyer to override, in any case of conflict of interest or rule, his or her responsibility to the practice as a whole and to fellow-members of it. If necessary, the Government is prepared to legislate to ensure the primacy of that personal responsibility. Subject to these considerations, the Government does not envisage statutory prescription of those with whom solicitors might be allowed to practise jointly. To do so would, in the Government's view, be to impose an unnecessary rigidity on solicitors' freedom to adapt to changing circumstances. Both the Benson Commission and the Hughes Commission concluded that there should be no relaxation of the prohibition on barristers and advocates respectively forming any kind of partnership practice. They regarded sole practice as crucial to the individualism and detachment of efficient advocacy, and were concerned that partnership practice - whether between barristers or between barristers and solicitors - would reduce the choice available to clients. They did not therefore contemplate the possibility of partnerships between barristers and members of other professions.

The Government's view

The Government thinks that barristers should now be permitted to operate in partnerships, should they choose to do so, for the reasons set out in Chapter 11 of this Green Paper at paras 11.13 to 11.17.

This raises the possibility of barristers being allowed to enter into multi-disciplinary practices. In view of the proposals in this Green Paper as to legal education (Chapter 3), advocacy (Chapter 5), direct access to counsel (Chapter 8) and judicial appointments (Chapter 10) there appears to be no good reason to distinguish in the future between barristers and solicitors in this respect. The advantages in terms both of improving the provision of legal services and of the need to maintain safeguards to the public are in principle similar in both cases. On safeguards, the crucial requirement must be that no obligation a barrister undertakes to partners or to anyone else should take precedence over his professional duty as a barrister to the courts, to his client and to the members of his profession. Subject to that, and any necessary legislative provision to ensure that a barrister's wider obligations would remain paramount over his obligations to fellow-members of a multi-disciplinary practice, the Government considers that the code of conduct of the Bar should be amended to allow barristers to choose the form of organisation through which they practise.

(B) Multi-national practices

Present Position

12.15 At present the same restrictions which prevent solicitors in England and Wales joining a multi-disciplinary practice also prevent them from practising in conjunction with lawyers from another jurisdiction. A solicitor who forms a partnership with a foreign lawyer may not, as a partner of the foreign firm, perform any of the functions reserved by statute to qualified persons. A solicitor may, however, perform such functions, if he establishes his own firm, while at the same time being a partner of the foreign firm. The restrictions on barristers practising except independently apply also in this area.

Arguments against change

12.16 There are three main arguments against change:-

(a) there are difficult questions about the regulation of firms whose partners are subject to different professional bodies. Fears have been expressed that the standards of the profession could be compromised;

(b) foreign firms might dominate or even take over domestic firms in some areas and this could be contrary to the public interest; and

(c) the present arrangements permit a wide range of forms of association short of partnership. English solicitors have taken full advantage of these. Full partnership is not therefore necessary, particularly in the light of the difficult regulatory problems.

Arguments for change

12.17 The following points are made in favour of change:-

(a) the demand for multi-national legal practices is growing as commercial operations become more international. This will undoubtedly be given a further fillip by the completion of the single market in Europe. English solicitors should be in a position to meet the market demand, unless any restrictions can be justified on public interest grounds. If the restrictions are not lifted, there is a risk that English solicitors will lose out to foreign lawyers who are permitted to be more flexible;

(b) some other countries (e.g. the Netherlands) and other UK professions (e.g. accountants) permit multi-national practices. English solicitors are permitted also to be partners in foreign practices subject to certain rules. This suggests that the regulatory concern is one that can, in principle, be met;

(c) the UK's general inward investment policies do not support excluding foreign firms for fear of dominance or take over in a particular sector. Normal competition policy prevents anticompetitive mergers or monopolies. The Government endorses this argument for change as long as professional standards are maintained; and (d) the EC directive on the mutual recognition of professional qualifications (which comes into force in early 1991) will assist lawyers from other member states in gaining access to the legal professions in England and Wales. Continuing restrictions on English lawyers' rights to form partnerships with colleagues from other member states would be anomalous in the context of such a move toward a freer Community-wide market in professional services.

Safeguards

12.18 As with multi-disciplinary practices, the Government is not persuaded that the public interest justifies the maintenance of restrictions on multi-national practices. Removal of the statutory restrictions would permit multi-national practices in principle. The issue would then be whether adequate safeguards can be established over multi-national practices to maintain professional standards and client protection.

12.19 The Government's view is that, as far as possible, safeguards should be a matter for professional self-regulation rather than Government control. Once the statutory restrictions had been lifted, the professions would, however, have to justify any remaining restrictions on the way that legal partnerships are operated to the competition authority.

12.20 There is a range of options on the operation of safeguards which are not necessarily mutually exclusive. The professional bodies would presumably want their members to remain subject to their own rules. They could require registration of a multi-national practice. All partners in a multi-national practice could then be subject to certain specific rules, although this approach might mean that foreign lawyers were effectively being required to be English solicitors rather than bringing their own expertise to the practice. An alternative option would be for the professional body to allow multi-national partnerships with lawyers who are bound by the rules of professional bodies of similar standing.

12.21 Once the statutory restrictions are lifted and the EC directive on mutual recognition of professional qualifications is implemented, the Government considers that the prevention of partnerships with EC lawyers would be increasingly anomalous. The Government also believes that it should be possible to extend multi-national practices to lawyers from other jurisdictions.

The Government's view

12.22 In summary, the Government considers that the legal professions should be as free as possible, consistent with the safeguarding of clients' interests, to offer their services in the ways that they find best meet the demands of clients. The same amendments to the Solicitors Act 1974 which will remove the statutory inhibitions on multi-disciplinary practices will serve to open the way for multi-national practices. The Government hopes therefore that the professional bodies will urgently review their own rules governing the establishment of these. 13.1 Clients need adequate information in order to make a sensible choice of a lawyer and to get maximum value for money through the lawyer and client relationship.

Background

13.2 The legal profession, like many other professions, has traditionally placed restrictions through practice rules or codes of conduct on the freedom of its members individually to inform the public about what services they offer and at what price. These restrictions in part reflected a feeling that practices such as advertising and price competition, which are common and unobjectionable in a commercial context, were undignified in a professional context and incompatible with the status and image of the profession. It was argued that individual advertising - as opposed to information about itself and its services disseminated by the profession collectively - would damage the relationship of trust between lawyer and client, and that it could be misleading to members of the public who consult a lawyer only occasionally and who are in any case not well placed to judge the quality of service offered.

The Government's approach

13.3 The Government considers that no further restraint is necessary on the way in which information is given about the legal profession beyond the principles of the British Code of Advertising Practice of the Advertising Standards Authority, which are that advertising should be legal, decent, honest and truthful. In the opinion of the Government these are strong safeguards. There should be no barriers to the publication of relevant information about the practices of the profession and the services it offers. This would help greatly to ensure that:-

(a) individual members of the public are enabled to make an informed choice of the legal adviser most suited to their needs;

(b) it becomes easier for newly qualified lawyers to enter into and establish practice;

(c) there is an incentive for established lawyers to improve their efficiency and the quality of the services they offer; and

(d) there is an encouragement to lower charges.

The overall benefit to both lawyers and their clients will, in the Government's view, improve the access of the public to justice.

Present position

13.4 Restrictions on the freedom to advertise of members of both branches of the profession were examined in reports of the Monopolies and Mergers Commission which were published in 1976. The Commission came to different conclusions in the conditions prevailing at that time. Consequently the present position on providing information differs as between solicitors and barristers.

(a) Solicitors

13.5 The Monopolies and Mergers Commission concluded that the restrictions on solicitors which then existed operated against the public interest. They recommended that Rule 1 of the Solicitors' Practice Rules, which placed a general prohibition on advertising and soliciting business, should be terminated, and that it should be replaced by a rule which would permit any solicitor to use, whenever he thought fit, such methods of publicity as he thought fit provided that they did not:

(a) claim for his practice superiority over any or all other solicitors' practices;

(b) contain any inaccuracies or misleading statements; or

(c) possess a character that could reasonably be regarded as likely to bring the profession into disrepute.

As a result of changes made to Practice Rule 1 and guidance issued by the Law Society in 1984, 1987 and 1988, solicitors are now free to advertise their services through any medium; and they may specify the fees they charge for particular services or the fact that they are prepared to give a quotation. The Law Society has also taken a number of steps to publicise the availability of solicitors' services generally.

(b) Barristers

13.6 As to barristers, the Monopolies and Mergers Commission concluded that the absolute ban in the Bar Council rules on advertising, touting and publicity did not operate against the public interest. The Commission distinguished barristers' services from those of other professions in that the lay client could (and still can) approach a barrister only through a solicitor. They took the view that the client was - almost uniquely - not disadvantaged by lack of information since he could rely on the advice of his solicitor as to which barrister to instruct. The Commission thought that the Bar Council rules concerned did not prevent solicitors from obtaining sufficient information adequately to advise clients. Moreover they thought the rules did not place any significant obstacles in the way of established barristers improving their efficiency and standard of service, or in the way of new barristers establishing themselves, given that barristers were required to practise singly (partnership being then, as now, prohibited) as a member of chambers. Consequently, the Commission did not recommend any change to the Bar Council rules.

13.7 In 1988 the Bar Council simplified its rules and issued a code of advertising and publicity, which permits the issue of a certain amount of information in approved directories and local newspapers and in approved chambers' leaflets. The position is, however, still substantially similar to that examined by the Monopolies and Mergers Commission and remains very restrictive in relation to individual barristers, especially in regard to giving information direct to the public.

The Government's view (a) Solicitors

13.8 The present Practice Rules and guidance of the Law Society on advertising by individual solicitors, combined with the action taken by the Law Society to issue information about solicitors' services generally, go a long way towards realising the advantages of publicity set out in para 13.3 above. Further consideration will, however, be needed about how best to bring to public attention the specialist skills and qualifications envisaged in Chapter 3. Although there is obvious advantage in making such specialisms widely known, it would be counter-productive if any amendment to the Practice Rules and guidance were to prevent solicitors from advertising the availability of services in particular areas in which they are experienced, but do not have a specialist qualification.

(b) Barristers

13.9 In view of the proposals about advocacy (Chapter 5) and direct access by lay clients to barristers (Chapter 8), the factors which led the Monopolies and Mergers Commission not to recommend any change in the Bar rules on publicity appear no longer to be relevant. It is therefore envisaged that the Bar Council's rules and code will need amendment to put them on the same lines as those the Law Society now has.

The Civil Justice Review's recommendation

13.10 Some alteration of existing professional practices will be needed in any event, in order to implement one important recommendation in the report of the Civil Justice Review. In its chapter on access to justice, that report recognised that fear of costs is a major factor which inhibits use of the Courts; and it recommended that solicitors and barristers should be encouraged and expected to provide information by way of stated rates per case per hour. The Government endorses this finding and strongly supports the recommendation. For solicitors it may be necessary for the Law Society to consider how its existing rules and guidance might be strengthened in order to produce more specific details. The Code of Conduct of the Bar effectively prohibits barristers from publishing their charges. Accordingly the Government believes that the code should both be relaxed to permit this and also expanded so as to encourage the routine provision of information about fees in individual cases. CHAPTER 14 - PROBATE

Introduction

14.1 In this chapter the Government sets out why it proposes to amend section 23 of the Solicitors Act 1974 which imposes restrictions on those who may draw or prepare for reward certain papers in connection with non-contentious applications for probate and letters of administration. It seeks views on whether the restrictions should be removed altogether or whether applications for reward should be made only by specific classes of persons.

Existing restrictions

14.2 Under section 23 of the Solicitors Act 1974 it is an offence for anyone apart from a solicitor, barrister or notary to draw or prepare for reward the papers on which to found a grant of probate or letters of administration.

14.3 The papers required are:-

(a) an affidavit by which the applicant for the grant swears that he will administer the estate according to the law and

(i) if he is an executor, swears that he is the executor named and identifies the will as the last will of the deceased; or

(ii) if there is no executor or no will, identifies his title to the grant;

(b) very occasionally, affidavits in respect of certain other matters; and Applications for a grant may be made in person or by a solicitor. The Non-Contentious Probate Rules provide that only applications by a solicitor do not require personal attendance at the Probate Registry.

Difficulties created

It is common practice for a testator to nominate a bank as his executor. A bank for this purpose operates as a trust corporation. The expression "trust corporation" is defined by section 128 of the Supreme Court Act 1981 and the Law of Property (Amendment) Act 1926 as meaning the Public Trustee, a corporation appointed by the Court in any particular case to be a trustee, or a corporation entitled under the Public Trustee Rules to act as custodian trustee. The list of corporations entitled to act is large and varied. It includes the Treasury Solicitor, charities authorised by the Lord Chancellor, local authorities, and organizations like British Gas, London Regional Transport and the British Coal Corporation in relation to their pension funds. It also includes UK or EEC companies which are empowered to undertake trust business, have at least one place of business in England and Wales and have issued capital of £250,000 of which not less than £100,000 has been paid up in cash. Examples of such companies are insurance companies and, as stated at the beginning of the paragraph, banks.

A trust corporation is, like any other executor, entitled to administer the estate in respect of which it has been appointed. However, as it receives a fee for being executor, it cannot prepare the affidavit or account. Nor can it make a personal application for probate as it is specifically excluded from doing this by the Non-Contentious Probate Rules. It must therefore instruct a solicitor to prepare the papers and make the application on its behalf.

14.7 It might appear that it could avoid these difficulties by making the application through an in-house solicitor. However there is some doubt as to whether this would be lawful. It is argued that the restrictions on unqualified persons (i.e. those who are not solicitors) cannot be avoided by an unqualified person employing a solicitor to act as his agent. If this interpretation of section 23 is correct, the result is illogical, bearing in mind that employed solicitors are able to litigate on behalf of their employers and will soon be able to provide conveyancing services on their behalf. Nevertheless, the wording of section 23 can be seen as a bar on making applications for grants through employed solicitors.

14.8 Banks have been arguing for some time that section 23 should be amended so that they are clearly permitted to make applications for grants. In addition licensed conveyancers now argue that they need to be able to make applications on behalf of clients. An obvious example is where their clients need to obtain a grant of probate to obtain a good title. At the moment, unless clients are willing to make personal applications, licensed conveyancers have to send them to solicitors.

Justification for restrictions

14.9 The justification for the restrictions in section 23 would appear to be:- (a) the need to protect the estate. The protection that the section might give could be only very limited. It does not apply to cases where the executor or his agent acts without reward. It does not protect the estate once it is in the hands of the executors which is the stage at which most dishonesty would take place. It bites only on the formal application for the grant.

(b) the need to protect the courts from poorly prepared documents. In cases where trust corporations administer estates, it is thought that they prepare the documentation so the role of the solicitor is purely nominal. In the view of the Probate Registry, documents prepared by trust corporations are at least as well prepared as those prepared by solicitors. The Probate Registry checks all applications and will not issue a grant unless it is satisfied that all is in order.

14.10 The Law Society were until recently firmly against any change. The President, however, in his recent address to the Law Society Conference, said:-

"We are reassessing the areas of work in which we retain privileged positions. For example, the Council is looking again at whether the monopoly we enjoy by statute for taking out probate and letters of administration, is really justified in the public interest. I will tell you my view. Non-contentious probate is an area of work which as a profession we have traditionally dominated. Where banks or other trust corporations have been instructed as executors to undertake the bulk of the winding up of an estate is there really a public safeguard in requiring only the probate papers themselves to be drawn and lodged by a solicitor? We know that our charges for executorship are modest compared with those the bank charge, and we should be publicising this fact to our clients. If we cannot stand on our reputation in this area and maintain a substantial share of the market, we do not deserve to have it artificially maintained for us by protective legislation."

The Government welcomes this constructive approach.

Relaxation

14.11 The Government has concluded that it can no longer justify maintaining the present statutory restriction on those who may make applications for grants of probate or letters of administration for reward in non-contentious cases. However it wishes to seek views on whether the right course is to widen the class of people who may apply for reward - Option A - or whether it is safe to remove the restriction altogether - Option B.

Option A

14.12 Documents have to be completed properly and executors need to be aware of any irregularities in the drafting of the will. There is also a possibility, should the restrictions go altogether, of a new breed of unregulated probate practitioner. The Probate Registry cannot be expected to pick up every mistake or attempt at fraud. It might be sensible to provide that applications for reward should only be made by specific classes of person who are likely to be reputable and who may well be regulated by statute or a professional body.

14.13 The obvious examples of such classes (apart from solicitors, barristers and notaries) are:-

(a) trust corporations; (b) licensed conveyancers; (c) authorised practitioners - as proposed in the Consultation Paper on Conveyancing by Authorised Practitioners; and (d) chartered and certified accountants.

14.14 The list in para 14.13 is not intended to be exhaustive and the Government would wish to consider representations from any other class which considers it might properly be included.

14.15 As explained in para 14.4, at present only solicitors may make applications for a grant without attending the Registry in person. It would seem to be both sensible and simple to put all the classes which are ultimately accepted in exactly the same position.

Option B

14.16 It is difficult to assess the practical as opposed to the theoretical problems of unregulated probate practitioners setting up in business. Furthermore, if there is a specific list of accepted persons, as suggested in para 14.13, there will inevitably be applications from those who would wish to add themselves. Option A may therefore cause more trouble than it is worth if the risk of fraud and error is very small. On the other hand, where fraud or error does occur the public would be less well protected in the case of unregulated probate practitioners. In addition, if anyone were able to apply for a grant as agent for another, it would be less justifiable to relax the requirement that all those except solicitors must attend the Registry in person. It would not be sensible to remove the requirement altogether, as it does help the Registry to ensure as far as possible that applications are made by the person properly entitled. On the other hand, any attempt to define those who need not attend seems to be a partial return to Option A.

Under either Option A or B, for those who do not make an application for a grant through a solicitor or notary, there is a further obstacle in the way of a one-stop probate service. Only a solicitor or notary may administer the oaths referred to in paras 14.3(a) and (b). This raises the question whether the requirement to swear an oath is too cumbersome and should be removed, on the understanding that making a dishonest unsworn statement for the purpose of an application would continue to be a criminal offence. The Government would welcome views on this suggestion.

Although the Government intends to remove the restrictions in non-contentious cases, it is not proposing to remove them in cases which are or become contentious. Such cases need to conducted by those with the necessary skill and training to conduct litigation and appear in court.

Possible special controls (a) Code of conduct

14.20 In the past it was suggested that there should be a code of conduct if trust corporations were to be allowed to apply for probate. The Government considers that there is no merit in this suggestion. As previously explained, the application for probate is a very small part of the administration of an estate and the code would not apply to the rest. It is also difficult to know what it could provide other than that applications should be made competently and honestly. Furthermore, the overwhelming majority of applicants will already be subject to statutory or professional controls over the way they conduct themselves.

(b) Charges

14.21 An anxiety often expressed about banks is that their charges for executorship are too high and are not subject to controls as are the charges of solicitors. (Benson, as a qualification to its general recommendation about trust corporations, proposed that charges by those who are not solicitors should be subject to control.)

14.22 In the past the banks have argued that one reason why their charges are high is because they have had to pay solicitors to do work which they have virtually done already. Whether this is true or not, the Government believes that in principle prices should be set by market forces and that its role is confined to ensuring that prices are clearly and truthfully expressed. Banks publish tables of fees. It is up to the testator to make his choice. This now also seems to be the view of the Law Society.

Summary

14.23 The government would welcome views on whether (a) anybody should be entitled to make applications for grants of probate or letters of administration; or

(b) only specified classes of person and, if so, who should they be?

(c) the requirement to swear an oath should be abolished. At the moment:—

(a) the UK is already bound by the requirement of the EC treaty to abolish restrictions on the freedom of establishment of nationals of a member state in the territory of another member state and by the requirement to abolish restrictions on freedom to provide services within the Community;

(b) discrimination on the grounds of nationality which might prevent lawyers from one member state practising in another is not permitted;

(c) UK lawyers, either as firms or individuals, are permitted to practise under their home state title in EC member states without acquiring a local qualification provided that they do not engage in work reserved for the host legal profession; and

(d) under the Legal Services Directive of 1977 a lawyer from one member state has the right to plead in the courts of another member state provided that he acts in co-operation with a local lawyer who has rights of audience before the court or tribunal in question.

The plans to achieve a single internal market from the end of 1992 will have further consequences for the provision of legal services in EC member states:—

(a) The Council Directive on a general system for recognition of higher education diplomas, adopted by the Council of Ministers on 21 December 1988, will promote the freedom of members of professions to provide services throughout the EC and make it easier for a professional in one member state to practise in other member states as a member of the local profession. Member states have two years in which to take the measures necessary to comply with the Directive. As far as lawyers are concerned, member states will have a choice between requiring an incoming professional to take an aptitude test or go through an adaptation period. Accordingly once he has completed the aptitude test or adaptation period and satisfied other relevant conditions, he will be entitled to admission as a full member of the host state legal profession;

(b) there will be an increased demand as a result of the directive both for host state practice (e.g. UK lawyers acquiring the local qualifications in another member state) and for home state practice (e.g. UK lawyers practising in other member states without acquiring local qualifications). It will be important to safeguard the possibility of establishment under both methods; and

(c) there will be an increased demand to remove restrictions on multi-national practices.

As far as the law itself is concerned there is likely by 1992 to be both an increased body of English law implementing EC directives and an increased body of EC law. Both business and private clients will be affected. Business clients especially are likely to become more active in the common market. They will need advice on matters such as the best place and form in which to set up business, whether there are advantages in having their contracts governed by the law of a particular state, and the proper forum in which to bring proceedings. Only those English lawyers prepared to develop an expertise in European Community law and practice and the law of EC Member States will be in a position to offer this advice. English lawyers who do not will lose the opportunity to compete both in the European market and at home. THE PROVIDERS OF LEGAL SERVICES

Barristers

1 The General Council of the Bar is the governing body of the Bar. It is responsible for policy matters affecting the Bar and for the professional conduct of barristers. Every barrister must be a member of one of the four Inns of Court (Lincoln's Inn, Inner Temple, Middle Temple, and Gray's Inn). The Inns have the sole right to call men and women to the Bar and to disbar them in the event of misconduct.

Qualification

2 There are three stages to qualifying as a barrister. The first, or academic, stage consists of a law degree or, for non-law graduates, a one year Diploma Course in substantive law. The Bar usually requires as a minimum a second class honours degree before allowing students to proceed to the second, or vocational, stage of training. This is run by the profession and currently consists of a 30-week course at the Council of Legal Education leading to the Bar Final examination. Once the student has passed the Bar Finals, and provided that he or she has kept the requisite number of terms at their Inn of Court (which normally takes two years), he or she is entitled to be called to the Bar. He or she is not, however, allowed to practise until he or she has completed the third stage of training which is called pupillage. This lasts for 12 months and is similar to an apprenticeship. The pupil is attached to a pupil master, an experienced barrister whose function it is to instruct the pupil in the skills he or she will need to practise at the Bar and to instill in him or her the ethics of their profession. The Bar introduced practising certificates and check lists for pupils in the autumn of 1988. After six months of pupillage the pupil must obtain a certificate from his or her pupil master confirming that he or she has satisfactorily completed the first stage of their pupillage. The Bar Council will then issue him or her with a practising certificate entitling him or her to take cases on their own account. On satisfactory completion of a further six months pupillage, confirmed by the production of a further signed certificate from his or her pupil master, the Bar Council will issue him or her with a Final Certificate enabling him or her to become a fully-fledged practising barrister either in independent practice or employment. There is no requirement that pupil barristers be paid a salary during their pupillage, although various awards and grants are available from the Council of Legal Education, the Inns of Court and an increasing number of sets of chambers. (See para 4 below for an explanation of the chambers system.)

There is no compulsory continuing education for barristers after pupillage, although the Bar has plans to introduce this. Courses are already organised for practitioners on, for instance, the interpretation of company accounts, EC law and matters of interest to the specialist Bar Associations.

Practice at the Bar

In order to practise at the Bar a barrister must, according to the rules of his or her profession, be a member of a set of chambers which includes having the services of a clerk. There were in the autumn of 1988 about 6,000 barristers practising from a total of 359 sets of chambers; 231 of these sets were in London and 128 were in the provinces. Again, according to his or her professional rules, a barrister must practise as an individual (partnerships are not permitted) and, with a few exceptions relating to other professions, a barrister is not allowed to take instructions directly from lay clients but may act only on the instructions of a solicitor. (Direct access to barristers is considered in Chapter 8.)

The employed Bar

Many barristers are employed in commerce and industry and by central and local government. The exact number of employed barristers is unknown although it is likely to be in excess of 5,000. Special professional rules apply to employed barristers: for instance, such a barrister may not supply legal services to the public, most employed barristers are not allowed to instruct counsel directly and, by virtue of a combination of statutory provisions and practice rules, the rights of audience of employed barristers are currently even more restricted than those of solicitors. (See Annex E: paras 19-21.)

Solicitors

The Law Society is the professional body of solicitors. In contrast to the Bar, many aspects of the solicitors' profession, such as entry, practice and conduct and discipline, are regulated by statute (the Solicitors Act 1974, c.47, as amended).

Qualification

As with barristers, solicitors have several stages to their training. The academic stage is satisfied by a law degree, or by passing the Solicitors First Examination (for non-graduates), or by passing the Law Society's Common Professional Examination (a one-year law course for non-law graduates). Completion of the academic stage entitles the student to take the 36-week course leading to the Solicitors Final Examination. As with the Bar, the vocational stage of training is exclusively under the control of the profession. Before being admitted as a solicitor, a student must also serve a period of practical training or apprenticeship called articles. The student is articled to an experienced solicitor for between two and five years, depending on his or her method of qualification. The Law Society prescribes the terms and conditions of articled clerkship and insists that the articled clerk is paid at least the recommended minimum salary, which in the autumn of 1988 was £6,000 in the provinces, £6,900 in outer London and £7,200 in inner London.

From 1 August 1985 the Law Society has required solicitors, in the first three years after admission to the Roll, to attend a system of continuing education. There are compulsory courses in office management and communication, standards of professional conduct and ethics and the handling of professional responsibility. In addition, the newly-qualified solicitor has to attend a certain number of voluntary courses over the three year period.

Practice as a solicitor

Solicitors may practise as sole practitioners or in partnership. In the autumn of 1988 there were 50,337 solicitors holding practising certificates. Between March 1986 and March 1987, the number of solicitors' practices increased by 2.3% in the North (Wales, the North and Midlands above the Severn - Wash Line), 3.9% in the South (including E Anglia but excluding London), and 5.1% in London (the old GLC area).\\textsuperscript{1} When s.9 of the Administration of Justice Act 1985 is brought into force (which is expected to be later this year), solicitors will be able to practise in corporate form with both limited and unlimited liability. Over recent years there has been a tendency for firms of solicitors to amalgamate to form larger units. The latest figures\\textsuperscript{2} indicate that between 1986 and 1987 the number of firms with 11 or more principals increased by 7.5%. These large firms can provide a specialised range of services, especially in the commercial field, and it is possible that such firms are now providing some of the expert advice which was previously given by the specialist Bar.

**Employed solicitors**

In 1987/88 3,258 solicitors were employed by local and national government and 2,892 solicitors were employed in commerce and other employments.\\textsuperscript{3} An employed solicitor who either holds or is exempted from holding a practising certificate is treated in all respects as any other practising solicitor with one proviso, namely, that since he or she has only one client - his or her employer - he or she is generally prohibited by professional rules from doing work directly for the public.

**Notaries**

Notaries, who are often solicitors who have undertaken additional academic and practical training, have a highly specialised legal function. Their main business

\\textsuperscript{1}The Law Society's Annual Statistical Report 1988

\\textsuperscript{2}The Law Society's Annual Statistical Report 1988

\\textsuperscript{3}The Law Society's Annual Statistical Report 1988 is to certify deeds and other documents under their official seal, for use anywhere in the world, so that such documents will be acceptable to judicial or public authorities as proof of the matters attested. For instance, notaries certify documents to take effect abroad, prepare and translate documents for use abroad, translate documents emanating from overseas, protest bills of exchange, certify copies, administer oaths and take affidavits, note and draw up ships' protests and advise on matters of English and foreign law.

Legal executives

Legal executives have both an academic and practical training and work mainly in solicitors' offices and legal departments of large organisations, including central and local government, commerce and industry. In practice legal executives are able to do all the work of solicitors except the work which is reserved to solicitors by statute (see Chapter 2 paras 2.1-2.2). There were in the autumn of 1988 around 16,500 subscribers to the Institute of Legal Executives.

Licensed conveyancers

This is a new profession established by the Administration of Justice Act 1985. Standards of competence and professional conduct are regulated by the Council for Licensed Conveyancers. There were in early 1989 approximately 500 licensed conveyancers. Licensed conveyancers are licensed to provide conveyancing services as defined by s.11(3) of the Administration of Justice Act 1985 and may act in domestic and commercial transactions. Licensed conveyancers have to pass examinations before being allowed to practise. Their final examination is similar in standard to the final examination taken by solicitors although it obviously covers a much narrower range of subjects namely, conveyancing, landlord and tenant law, organisations and revenue law and accounts. In addition, licensed conveyancers have to complete two years of practical training.

Licensed conveyancers may practise on their own account, although not for the first three years after qualifying, or in partnership. Mixed partnerships with other professions deemed suitable by the Council for Licensed Conveyancers are allowed, although there are no mixed partnerships as yet. Licensed Conveyancers will during 1989 be able to practise in corporate bodies controlled by licensed conveyancers. Licensed conveyancers may be employed by non-licensed conveyancers, but at the moment (see the consultation paper on conveyancing services issued today) they cannot provide conveyancing services to the clients of such employers.

Patent agents

Patent agents are specialist practitioners who deal with obtaining and enforcing intellectual property rights. They have both an academic and practical training and work either in the patent departments of large industrial organisations or in private firms of patent agents. Patent agents no longer have a monopoly on their practice. The Copyright Designs and Patents Act 1988 allows anyone to practise as a patent agent but reserves the use of the title "patent agent" and "patent attorney" to those who are on the register kept by the Chartered Institute of Patent Agents. Solicitors may also use the title "patent attorney".

**Insolvency practitioners**

Under the Insolvency Act 1986 insolvency practitioners practise as trustees in bankruptcy, liquidators, administrators, receivers and supervisors of voluntary arrangements. Insolvency practitioners are usually accountants, solicitors or members of the Insolvency Practitioners Association. Insolvency practitioners have to be authorised by professional bodies recognised for that purpose by the Secretary of State for Trade and Industry. If the practitioner is not a member of a recognised body, then authorisation has to be obtained from the Insolvency Practitioners Association, or, failing that, the Secretary of State.

**Banks, building societies, accountants and chartered secretaries**

Banks, building societies, accountants and chartered secretaries give legal advice to their clients on such matters as taxation, wills, insolvency and company law.

**Law centres**

The first law centre was set up in 1970 in North Kensington, London. There are now around 60 centres. Most of these are concentrated in urban areas. Law centres are staffed by a variety of advisers including salaried lawyers and tend to specialise mainly in welfare law, immigration and housing.

**Citizens advice bureaux** Citizens advice bureaux (CABx) were originally established in 1939 to give emergency services during the second World War. There are now over a thousand such bureaux handling around 6.8 million enquiries a year. CABx give advice on a variety of matters including social security, consumer protection, housing, the family, employment, health, education and immigration and nationality. Most advice is given by trained lay volunteers although most CABx have access to a solicitor on at least a rota basis.

Trade unions

Trade unions provide advice and assistance to their members on employment matters and will usually arrange representation on such matters for their members in tribunals and courts. Some trade unions also provide general legal advice to members either in-house or by referral to an outside solicitor.

The Royal British Legion

The Royal British Legion employs lay people, usually ex-servicemen, to work full-time on advising and representing appellants before the Pensions Appeals Tribunal. These lay people receive on-the-job training and are recognised as having considerable expertise in their field. ACADEMIC AND VOCATIONAL TRAINING

1. The appropriate training for lawyers will be a matter for consideration by the Advisory Committee. It seems sensible, however, that legal education should contain the following four stages: academic, vocational, practical and continuing (i.e. post-qualification) education.

(i) Academic stage

2. The current core subjects are as follows:

   - constitutional and administrative law
   - contract
   - tort
   - land law
   - trusts
   - criminal law

3. Marre has recently suggested that consideration should be given to teaching trusts and land law as a composite subject; and the Advisory Committee may wish to consider recommending this. In view of the thrust suggested for the vocational course (see para 4 below) the Advisory Committee might also consider whether evidence should be included among the core subjects to be studied at the academic stage. In addition, tuition at the academic stage ought perhaps to reflect the increasing importance of financial regulation and the EC. The Advisory Committee will be invited to consider whether and how this could be covered in core subjects at the academic stage.

(ii) Vocational stage

4. The Government considers that the emphasis at the vocational stage should be on the acquisition of the practical skills necessary for practice as a lawyer. The Government agrees with the views expressed in the Ormrod, Benson and Marre reports that there are strong arguments in favour of a common system of vocational training to cover the whole legal profession. The Advisory Committee might accordingly wish to consider giving a high priority to the development of a core of minimum requirements for the vocational stage of training.

These minimum requirements could, for instance, cover:

(a) civil procedure including probate; (b) criminal procedure and sentencing; (c) advocacy; (d) evidence (but see para 3 above); (e) conveyancing; (f) probate; (g) business accounts; (h) solicitors' accounts; (i) the management of a legal practice including computerisation; (j) negotiation and communication skills in both non-contentious and contentious matters; (k) lawyer-client relations (communication, counselling and advising); (l) drafting; and (m) professional ethics and conduct (to include the codes proposed in Chapter 4).

Not every practitioner would need to cover all these subjects: for instance, those marked with an asterisk might be options. It will, of course, be for the Advisory Committee to consider whether the suggested subjects are appropriate. The Committee will also need to consider the actual content of the courses and take into account the fact that students wishing to cover every option may need an extended period of qualification. (iii) **Practical and continuing stages**

Proposals covering the practical and continuing stages of training for advocacy are set out in Chapter 5. It will be for the Advisory Committee in due course to consider the practical and continuing stages of training for other specialisms. Present arrangements of the Bar and the Law Society for handling complaints

Part 1: The Bar

1 Cases before the Professional Conduct Committee of the General Council of the Bar (PCC)

The PCC consists of members of the Bar and a number of lay members nominated by the Lord Chancellor.

(a) Informal procedure Where the conduct disclosed may be dealt with informally, the PCC will inform the barrister in writing of its views and may also direct him to attend on the Chairman of the PCC or some other person.

(b) Summary procedure This is under consideration but has not been introduced. The proposal, however, is that, if the PCC wished to take a matter further without referring it to a Disciplinary Tribunal (see para 2 below) and there was no relevant dispute of fact, a barrister would be afforded the opportunity to make representations, in writing or in person, at a special committee of the PCC, which would have the power to administer an admonishment and reprimand or give advice on future conduct.

2 Cases before a Disciplinary Tribunal

More serious cases or those where there is a relevant dispute of fact are prosecuted by the PCC before a Disciplinary Tribunal. A Tribunal is chaired by a Judge and has four other members including one lay member. Less serious cases relating to breach of professional standards are treated in the same way as cases before the PCC. Where, however, a charge of professional misconduct is proved, barristers may be ordered to repay or forego fees or may be suspended or disbarred.

3 Hearing before the Visitors Appeal from the Disciplinary Tribunal lies to not fewer than three Judges of the High Court nominated by the Lord Chief Justice after consultation with the Lord Chancellor and known as the Visitors. There is no further internal appeal.

Part 2: The Law Society

The Solicitors' Complaints Bureau Complaints are first considered by the staff of the Bureau who prepare the cases for further consideration or else inform the complainant that there is no issue of conduct or shoddy work. The Investigation Committee monitors the way the Bureau handles complaints. The Adjudication Committee exercises the Law Society's disciplinary and other relevant powers.

(a) The Investigation Committee This has seven lay members, including the Chairman, and four solicitor members, two of whom are also Law Society Council members. Its functions are:-

(i) to review cases going to the Adjudication Committee and make recommendations for further investigation, if it thinks it necessary;

(ii) to review cases where the investigating officer wishes to terminate an investigation, but the complainant does not;

(iii) to review cases before a file is referred to the Lay Observer and review reports of the Lay Observer; and (iv) to make formal recommendations to the staff for improvements in procedure.

(b) The Adjudication Committee This has nine Law Society members including the Chairman, three other solicitors and six lay members. It has a large number of powers and in particular may:-

(i) take disciplinary proceedings against a solicitor at the Solicitors' Disciplinary Tribunal;

(ii) rebuke solicitors;

(iii) discipline solicitors for shoddy work, e.g. order rectification of the mistake or the remission of fees;

(iv) order an inspection of accounts;

(v) intervene in a practice to protect the interests of a client;

(vi) impose conditions on a practising certificate;

(vii) order payment of interest on a client's money; and

(viii) order payments out of the compensation fund when a person has suffered loss as a consequence of a solicitor's dishonesty. This Committee is established by statute and exercises the delegated powers of the High Court. It considers the most serious cases of professional misconduct. Complaints are usually referred by the Solicitors' Complaints Bureau, but they may also be made direct by the public or in certain cases by the Lay Observer. It normally sits with three members, at least one of whom must be lay. The members are appointed by the Master of the Rolls. It has powers to strike off the roll, suspend, fine or reprimand.

6 The High Court Appeal from the Solicitors' Disciplinary Tribunal lies to the High Court. In addition the High Court retains its general supervisory jurisdiction over the profession. Applications may be made direct to the High Court to cause a solicitor to answer allegations.

7 The Lay Observer He is an independent office-holder appointed by the Lord Chancellor. Section 45(1) of the Solicitors Act 1974 empowers him to examine any written allegation made by or on behalf of a member of the public concerning the Law Society's treatment of a complaint about a solicitor or his employee. The Lay Observer is only able to report on this treatment and to make recommendations. He has no powers to reinvestigate the complaint. When a complaint raises an issue of both conduct and quality of services, he may, in those circumstances only, make an application to the Solicitors Disciplinary Tribunal in respect of the quality of services. Rights of audience in the courts of England and Wales

1 A litigant in person, that is a party to proceedings who is not represented by a lawyer, has a right of audience in his or her own cause in all courts and tribunals. A barrister practising from chambers has a general right of audience on behalf of his or her clients. The rights of audience of solicitors in private practice are more limited. The rights of audience of employed lawyers are more restricted still. By virtue of the European Communities (Services of Lawyers) Order 1978 (SI 1978 No.1910) an EC lawyer may appear before any court, tribunal or public authority in the UK provided that throughout the proceedings he or she is instructed with, and acts in conjunction with, an advocate, barrister or solicitor who is entitled to practise before the court tribunal or public authority concerned and who could properly provide the service in question.

The Magistrates' Courts

2 The Magistrates' Courts deal with around 90% of the total criminal workload at first instance. They also deal with care proceedings in respect of juveniles and licensing applications, and have a sizeable domestic jurisdiction. Decisions on both fact and law are taken either by a bench of lay magistrates or by a stipendiary (legally qualified) magistrate, sitting without a jury.

3 Rights of audience are governed by statute, currently s.122 of the Magistrates' Courts Act 1980. This provision derives from s.2 of the Trials for Felony Act 1836 (6 & 7 Will. 4, c. 114) enacted to reform the law following the decision in Collier v Hicks (1831) 2 B & Ad. 663 in which it was held that no person had a right to act as an advocate on the trial of an information before justices of the peace. without their permission. The Magistrates' Courts Act 1980 s.122(1) provides that a party to any proceedings before a magistrates' court may be represented by counsel (i.e. a barrister) or solicitor. In addition, various statutes such as the Local Government Act 1972 s.223 and the Customs and Excise Management Act 1979 s.155, give specified persons authority to conduct particular prosecutions, although they may not be counsel or solicitor. The Magistrates' Court also has a discretion to allow someone else to act on behalf of either party to the proceedings.

The Crown Court

4 The main jurisdiction of the Crown Court is in criminal proceedings. Apart from cases committed for trial from the Magistrates' Courts, the Crown Court deals with appeals from the Magistrates' Courts against conviction and sentence. It also hears appeals from decisions of magistrates in care proceedings in juvenile cases, appeals from the decisions of justices in licensing matters and appeals from local authorities and chief officers of police under various statutes. The Crown Court has a small original civil jurisdiction, such as applications under the Reservoirs (Safety Provisions) Act 1930. In criminal cases, the court is presided over by an Assistant Recorder, Recorder, Circuit Judge or High Court Judge. In trials on not guilty pleas the judge sits with a jury whose function it is to decide whether the charge against the accused person has been proved. Lay magistrates sit with the legally qualified judges on some cases and appeals.

5 Barristers practising from chambers have a right of audience in all cases in the Crown court. Rights of audience for solicitors are governed by s.83 of the Supreme Court Act 1981 (reproducing the now repealed s.12 of the Courts Act 1971). This provides as follows:- "(1) The Lord Chancellor may at any time direct that solicitors may appear in, conduct, defend and address the court in any proceedings in the Crown Court, or proceedings in the Crown Court of any description specified in the direction.

(2) A direction under this section may have effect as respects all places where the Crown Court sits, or as respects a specified area, region or circuit, or as respects one or more specified places where the Crown Court sits.

(3) In considering whether to exercise his powers under this section as respects any one or more specified places where the Crown Court sits, the Lord Chancellor shall have regard to any shortage of counsel in the area in question, any rights of audience formerly exercised by solicitors at any court of quarter sessions in the locality in question, and to any other circumstances affecting the public interest.

(4) Any direction given under this section may be subject to such conditions and restrictions as appear to the Lord Chancellor to be necessary or expedient."

By virtue of directions made by the Lord Chancellor on 7 December 1971, 9 February 1972 and 15 August 1988, solicitors have rights of audience in:-

(a) appeals to the Crown Court from a Magistrates' Court or on committal for sentence, if the same firm appeared in the court below;

(b) civil proceedings in the Crown Court on appeal in similar circumstances; and

(c) a limited number of cases in remote areas where solicitors traditionally had full rights of audience at Quarter Sessions (Caernarvon, Barnstaple, Truro, Doncaster and parts of Lincoln), which have been replaced by the Crown Court. Rights of audience for Crown Prosecutors (barristers and solicitors) employed by the Crown Prosecution Service are governed by s.4 of the Prosecution of Offences Act 1985. This gives Crown Prosecutors the same rights of audience in the Crown Court as solicitors holding practising certificates; and the Lord Chancellor may give any such directions under s.83 of the Supreme Court Act 1981 in respect of Crown Prosecutors as he could give in respect of solicitors.

The County Courts

These courts have a wide-ranging civil jurisdiction in cases where, generally speaking, the amount in issue does not exceed £5,000, covering debt, breach of contract, personal injury, recovery of land, bankruptcy and insolvency, admiralty, family proceedings and miscellaneous matters such as mental health and sex discrimination. Trials are heard by Assistant Recorders, Recorders or Circuit Judges, and interlocutory matters are heard by County Court Registrars.

Rights of audience in the County Court are governed by sections 60 and 61 of the County Courts Act 1984. The material part of s.60 is as follows:-

(1) In any proceedings in a county court any of the following persons may address the court:-

(a) any party to the proceedings; (b) a barrister retained by or on behalf of any party; (c) a solicitor acting generally in the proceedings for a party to them (in this subsection referred to as a 'solicitor on the record'); (d) any solicitor employed by a solicitor on the record; (e) any solicitor acting as an agent for a solicitor on the record; (f) any solicitor employed by a solicitor so engaged; and By virtue of s.61 of the County Courts Act 1984, the Lord Chancellor may by direction confer rights of audience in the County Court on persons in employment consisting of or including giving assistance to solicitors in the conduct of litigation. Only one such direction has been made to date and that was in 1978 when this power was used to confer rights of audience on Fellows of the Institute of Legal Executives on behalf of their solicitor employer in unopposed applications for an adjournment or applications for judgments by consent.

The High Court

9 The High Court is divided into three Divisions: Chancery, Queen's Bench, and Family. There is no upper limit on its jurisdiction. It deals with a range of heavy civil work covering matters such as debt, personal injury, land and property, breach of contract, bankruptcy and companies proceedings. In addition the High Court deals with public law and various specialist cases, including patents. The three Divisions of the High Court exercise appellate as well as first instance jurisdiction: The Divisional Court of the Chancery Division hears appeals in revenue matters from the Commissioners of Taxes and bankruptcy matters from the County Courts; the Queen's Bench Divisional Court exercises appellate and supervisory jurisdiction over the Crown Court (except in relation to the conduct of trials on indictment), inferior courts and tribunals and the actions and decisions of public bodies under the judicial review procedure; the Divisional Court of the Family Division hears appeals from Magistrates' Courts in domestic matters.

10 The Chancery Division consists of the Lord Chancellor, who is its president, the Vice-Chancellor and such of the High Court judges as are for the time being attached to it. The Queen's Bench Division, which is much the largest, consists of the Lord Chief Justice, who is its president, and such of the High Court judges as are for the time being attached to it. The Family Division consists of the President of the Family Division and such of the High Court judges as are for the time being attached to it. Apart from a few cases in the Queen's Bench Division, for example in some actions for defamation, where juries sit to decide the facts, cases in the High Court are heard by judges who sit alone and have to make decisions on both the facts and the law. Interlocutory matters are dealt with by Masters and District Registrars.

Subject to the 1978 Order mentioned above (para 1), rights of audience in the High Court have not hitherto been regulated by statute, but by the High Court judges acting as a collegiate body (Abse v Smith [1986] 1 QB, 536). It is an established rule that, save in an emergency, a solicitor cannot appear on his client's behalf in open court. According to long custom, barristers have a general right of audience in the High Court, whereas solicitors do not. Solicitors do have a general right of audience in the High Court when sitting in chambers, whether before a judge or Master, which extends to their responsible representatives (such as legal executives). Solicitors may also appear in:-

(a) bankruptcy matters, and (b) formal or unopposed matters where there is unlikely to be any argument and where the court will not be called upon to exercise any discretion.

A solicitor may also represent his client in the Supreme Court when judgment is delivered in open court following a hearing in chambers at which that solicitor conducted the case for the client (Practice Direction: Solicitors: Rights of Audience) [1986] 1 W.L.R.545 issued by the Lord The Court of Appeal

12 The Court of Appeal is divided into the Criminal Division and the Civil Division. The judges of the Court of Appeal are the Lord Chief Justice, who is the president of the Criminal Division, and the Master of the Rolls, who is the president of the Civil Division, together with 27 Lords Justices of Appeal. The President of the Family Division and the Vice-Chancellor also sit in the Court of Appeal for part of their time. The Court of Appeal normally sits in a bench of two or three.

13 The Criminal Division of the Court of Appeal hears appeals against conviction and sentence from the Crown Court in England and Wales. In 1987 the number of applications and appeals registered was 8,320 - a rise of 8% over the number registered in 1986. Courts in the Criminal Division are constituted from the Lord Chief Justice and the Lords Justices assisted by judges of the Queen's Bench Division of the High Court as required. There are no juries.

14 The Civil Division of the Court of Appeal hears appeals from the High Court in civil matters, the County Courts, and various tribunals. Courts in this Division are normally constituted from the Master of the Rolls and the Lords Justices.

15 Rights of audience in both Divisions are governed by the judges of the Court of Appeal acting as a collegiate body (Abse v Smith above). The position on rights of audience is the same as that in the High Court. The House of Lords in its judicial capacity is the supreme court of appeal in Great Britain and Northern Ireland. It adjudicates on matters of law of general public importance. The main judges of the House of Lords are the Lord Chancellor and the Lords of Appeal in Ordinary. An appeal lies to the House of Lords:-

(a) from any order or judgment of the Court of Appeal in England, by leave of that court or the House of Lords, subject to restrictions imposed by statute or by practice in specific matters;

(b) from any order or judgment of any court in Scotland from which error or appeal lay on or before 1 November 1876 by common law or by statute;

(c) subject to statutory restrictions, in exceptional cases direct from a decision of the High Court in England;

(d) from any order or judgment of the Court of Appeal in Northern Ireland by leave of that court or the House of Lords, subject to statutory restrictions; and

(e) subject to statutory restrictions, in exceptional cases direct from decisions of the High Court of Justice in Northern Ireland.

Rights of audience are the same as in the High Court and the Court of Appeal. In addition, Scottish advocates and barristers from Northern Ireland have rights of audience and solicitors may appear before the Appeal Committee of the House of Lords when it is considering a petition for leave to appeal.

The Judicial Committee of the Privy Council

The Judicial Committee of the Privy Council is the final court of appeal for those Commonwealth countries which CONFIDENTIAL

retain the right of appeal to Her Majesty in Council. Its members are normally drawn from among the Lord Chancellor and the Lords of Appeal in Ordinary. In its domestic jurisdiction, the Committee entertains appeals against schemes by the Church Commissioners under the Pastoral Measure Act 1983. The Committee also hears appeals from their disciplinary bodies by doctors, dentists, opticians, veterinary surgeons and members of professions supplementary to medicine; it also hears appeals in prize cases during and after a period of hostilities. Rights of audience, which are governed by custom and not statute, extend to English and Northern Ireland barristers, Scottish advocates and all advocates duly qualified in countries from which appeals lie to the Queen in Council.

The rights of audience of employed lawyers

19 Solicitors employed by non-legal employers, who either hold or are exempted from holding practising certificates, have the same rights of audience on behalf of their employer as solicitors in private practice.

20 The rights of audience of employed barristers are currently more restricted than the rights of employed solicitors. For instance, employed barristers are presently allowed to appear as advocates for their employers in the Magistrates' Court and the County Court only if they are given leave to do so by the court. Employed solicitors, on the other hand, can appear in these courts as of right. This anomaly is the result of the combined effect of the wording of s.122(1) of the Magistrates' Courts Act 1980 and s.60(1) of the County Courts Act 1984 and the provisions of the Third Edition of the Bar's Code of Conduct which deny to employed barristers the status of counsel. It will be removed by the provisions of the Fourth Edition of the Bar's Code of Conduct (due to come into force on 1 February 1989) which will enable an employed barrister to appear on behalf of his employer as counsel in circumstances where barristers in general practice do not have an exclusive right of audience. This alteration to the Code should also enable employed barristers to appear in the same instances as employed solicitors in the High Court, Court of Appeal and House of Lords.

21 Employed lawyers do not have rights of audience in the Crown Court. This is the result of the combined effect of the provisions of s.83 of the Supreme Court Act 1981, the current Directions made by the Lord Chancellor and professional practice rules.

Tribunals

22 At present, there are generally no restrictions on rights of audience before tribunals. This is because, as recognised by the Report of the Committee on Administrative Tribunals and Enquiries (1957 Cmd. 218), the main characteristics of tribunals are, "cheapness, accessibility, freedom from technicality, expedition and expert knowledge of their particular subject." (para 38). Because of these characteristics it is generally considered that most applicants should be able to cope with bringing proceedings without the need for assistance from a qualified legal representative. Assistance may, however, be available from other sources; for instance, trade unions and CABx often represent employees before Industrial Tribunals and also represent applicants before the Criminal Injuries Compensation Board. CABx are also playing an increasing role in representing applicants before Mental Health Review Tribunals. Conveyancing by Authorised Practitioners

Contents

Chapter 1 Introduction

Chapter 2 Background

Chapter 3 The new approach The provision of conveyancing services by employees of lending institutions Authorised practitioners Requirements for authorisation Obtaining authorisation

Chapter 4 Summary of proposals

Annex Proposed code of conduct: main principles CHAPTER 1 - INTRODUCTION

1.1 The Government proposes to legislate to permit a simpler system to be implemented for banks, building societies, other institutions and individuals to provide conveyancing services to clients subject to appropriate safeguards. There is legislative provision for a system of this kind in Schedule 21 to the Building Societies Act 1986, but this Schedule has not been implemented. The Government now wishes to substitute an alternative statutory framework which will be less elaborate than that envisaged in Schedule 21 to the 1986 Act but which will still provide the necessary controls. These proposals will affect only England and Wales.

1.2 The new system will provide for the authorisation of practitioners who will be able to offer conveyancing services to the public. The identity of the practitioners may vary but they will all be required to comply with a set of strict conditions. These will include abiding by a code of conduct and employing sufficient solicitors or licensed conveyancers to supervise or provide the conveyancing services.

1.3 There will be no prohibition against lending institutions providing conveyancing services to their borrowers. The Government is, however, concerned to see that the many independent solicitors and licensed conveyancers throughout the country can compete with such institutions on a fair basis. It therefore invites views on whether authorised practitioners might be required not to subsidise the provision of conveyancing services from their other activities. The same requirement could be placed also upon existing independent solicitors and licensed conveyancers so as to ensure a level playing field for all. The Government would welcome comment on whether this could be achieved, if it was provided that, in order to remain authorised, authorised practitioners had to:

(a) offer conveyancing services at not less than their true cost; and

(b) be able to prove that they were doing this to the satisfaction of their auditors.

It is also for consideration whether any authorised practitioner, who was a lending institution which had offered to add the cost of the conveyancing transaction to the loan, should be required to do this, whether the client chose to use that authorised practitioner or an independent conveyancer to carry out the conveyancing transaction.

Views are therefore invited on whether suitable detailed arrangements could be made to give effect to these proposals.

1.4 It follows from this that there would also appear no longer to be any reason to prevent lending institutions or other potential authorised practitioners from having a shareholding in incorporated licensed conveyancers' practices, when these come into being, since such companies will be required to abide by the relevant professional rules of conduct of the Council for Licensed Conveyancers. At present such a shareholding is prohibited by the rules of the Council, but, if the Government in due course confirms its intention to adopt the proposals set out in this paper, the Council may wish to consider amending accordingly its approach to incorporated practices. The Law Society also might wish in the light of this to review its policy on outside shareholdings. Arrangements linking solicitors and others are considered in Chapter 12 of the Green Paper on the Work and Organisation of the Legal Profession which is published today. CHAPTER 2 - BACKGROUND

2.1 At the beginning of the nineteenth century it appears that there was nothing to prevent anyone at all from setting up as a conveyancer, but in 1804 the legislature made conveyancing the monopoly of the legal profession. At that time there was a considerable number of branches of the legal profession, but most have since dwindled away. Statutory provisions giving the legal profession a monopoly over conveyancing were last re-enacted in the Solicitors Act 1974. Section 22 provided that only solicitors and certain other excepted categories could draft conveyancing documents for reward; and in practice solicitors had the work to themselves.

2.2 In 1983 the Government decided that the existing restrictions should be modified in order to stimulate competition. It was argued that the solicitors' monopoly was wrong, that their costs were too high and that it was not necessary to be a solicitor to draft conveyancing documents. The Government therefore began the process which led to the establishment, by the Administration of Justice Act 1985, of the new profession of licensed conveyancers, who are able to provide conveyancing services in competition with solicitors. In addition in December 1983 the Solicitor General announced that the Government intended to introduce legislation to extend the right of conveyancing to solicitors employed by banks and building societies, subject to safeguards.

2.3 The declared policy was set out by the Solicitor "The Government issued a consultation paper last year seeking views on the way in which conflicts of interest and anti-competitive practices could be avoided if building societies and other financial institutions were to offer conveyancing services to the public. Following that consultation, the Government have concluded that there is no difficulty in principle in such institutions providing conveyancing to persons to whom they are not also offering a loan. However, the Government are not satisfied that lending institutions could safely be permitted to offer both conveyancing and a loan in the same transaction. It is therefore proposed to prohibit lending institutions from providing conveyancing, either directly or through a subsidiary company in which they hold a majority stake, to those who are also borrowing from them.

"The Government are also examining the possibility of estate agents providing a combined service of sale and conveyancing to vendors, and of lending institutions providing conveyancing to borrowers from them through associated companies in which the lender holds only a minority shareholding. Consultation on those matters is not yet complete.

"It is also proposed to set a number of other conditions to ensure proper consumer protection. In particular, institutions will be required to ensure that their conveyancing work is supervised by a qualified person; and adequate arrangements will have to be made to protect the consumer against negligence or fraud on the part of those providing the service”.

2.4 The necessary statutory provisions were placed in section 124 of and Schedule 21 to the Building Societies Act 1986, although these provisions have not been implemented. They allow the Lord Chancellor to recognise institutions - which are defined as "any building society or other body corporate or any unincorporated association" - and individual practitioners as suitable to undertake the provision of conveyancing services. Recognised institutions and practitioners are exempt from section 22 of the Solicitors Act 1974. In addition recognised institutions which happen to be bodies corporate are also exempt from section 24 of the 1974 Act which prohibits bodies corporate from providing conveyancing services.

2.5 The Lord Chancellor was given extensive rule-making powers, in order that he might control these new conveyancers. He may make rules to prescribe the circumstances in which institutions and practitioners may be recognised and the conditions which must be met in order that such recognition may continue (paragraph 2(1) of Schedule 21). He may prescribe appropriate conditions for protecting persons for whom conveyancing services are provided from conflicts of interest (paragraph 2(2)(a)) and for securing that compensation is payable to such persons in respect of negligence, fraud or other dishonesty (paragraph 2(2)(b)). The Schedule also permits the Lord Chancellor to make rules for the manner, form, period and revocation of recognition on specified grounds, (paragraph 3); for the keeping of a list of recognised institutions or practitioners (paragraph 4) and for the delegation of all the Lord Chancellor's functions (except for rule making) to any officer or officers nominated by the rules (paragraph 5). All recognition rules are to be made by statutory instrument.

2.6 The Schedule clearly envisages that the Lord Chancellor will:-

(a) provide an elaborate structure of rules and guidelines to govern the conduct of recognised institutions and practitioners; and

(b) set up administrative machinery which will oversee the granting of recognition, ensure that the rules are observed and, where necessary, will revoke recognition or impose disciplinary sanctions.

2.7 The justification for such a structure would be that there would be insufficient protection and control without it. The Government, however, now considers that adequate alternative machinery could be set up bearing in mind that:-

(a) those organisations and individuals who are most likely to seek and obtain recognition are already regulated by statute and/or professional bodies; and

(b) there will be a requirement that those who carry out or supervise the conveyancing services must be solicitors or licensed conveyancers. (A.) The provision of conveyancing services by employees of lending institutions

3.1 Government policy as stated in 1985 was to prohibit lending institutions from providing conveyancing services, either directly or through a Company in which they had a majority shareholding, to those who were also borrowing from them. The prohibition was the result of unresolved concerns over conflicts of interest which might arise if a solicitor or licensed conveyancer employed by a lending institution acted both for the institution and the borrower. The conflict would be between the solicitor's duty to his employer and the duty to the borrower, who would be his client. Such conflicts could arise where the borrower revealed something to the solicitor or licensed conveyancer which might reduce his chances of obtaining a loan. It was considered that the solicitor or licensed conveyancer might also be in difficulty in giving independent advice about the type of mortgage which would be required and the conditions of the loan.

3.2 The Government no longer thinks it necessary to follow the policy it announced in 1985. It now believes that, although the conflicts of interest outlined in paragraph 2.1 above might arise very occasionally, nevertheless adequate safeguards can be devised and, in the vast majority of cases, the interests of the borrower and the lender in the conveyancing transaction will be identical. Indeed, at present the same solicitors and licensed conveyancers frequently act for both the lending institution and the borrower. For years lending institutions have been willing to use the same solicitor (and are now willing to use the same licensed conveyancer) as the customer at a significant saving to him. The added risk of a conflict of interest where the conveyancer is actually employed by the lending institution appears to be a matter of degree rather than substance and to be relevant only in exceptional circumstances.

3.3 The Government therefore does not consider that the risks are large enough to outweigh the potential benefits of a more relaxed approach, provided that there are sufficient safeguards to offer the borrower an informed choice. These safeguards will be incorporated in the Code of Conduct proposed in paragraph 3.9. A few will be specific to lending institutions - and, it should be pointed out, to any insurance company which might wish to provide conveyancing services to someone taking out an endowment mortgage. Others will be generally applicable to all authorised practitioners. On this basis the Government proposes to allow solicitors and licensed conveyancers employed by lending institutions to undertake conveyancing work on behalf of their employers' clients.

(B.) Authorised practitioners

3.4 The Lord Chancellor no longer intends that he will consider individual applications from those who wish to provide conveyancing services to the public. Instead he proposes to set out a number of requirements which any person, whether an individual, a partnership or a corporate body, must meet before it will be allowed to provide conveyancing services. All those who meet such requirements will be known as authorised practitioners. Requirements for authorisation

3.5 To obtain authorisation the individual practitioner will have to satisfy the requirements set in the following areas:

(i) Suitability to provide conveyancing services

3.6 The practitioner must be fit and proper or be a business which is run by fit and proper people, conducting the business in a prudent and competent manner. Practitioners must also have the experience and competence to provide these additional services. This means that practitioners must either be authorised under statute, like banks or building societies, or obtain authorisation by a recognised authority as indicated in paragraph 3.18. below.

(ii) Employment of a sufficient number of solicitors or licensed conveyancers (or both) to provide or supervise the provision of the conveyancing services

3.7 Although an authorised practitioner will be exempt from section 22 of the Solicitors Act 1974, it will remain a requirement that the conveyancing work must be carried out by those who have the relevant professional expertise.

(iii) Protection of clients' money from improper use

3.8 In order to reduce the risk of dishonesty or the improper use of clients' money, such money must be paid into separate clients' accounts. In addition, in cases where money is held by an authorised practitioner on behalf of a client, he must place it on deposit and pay the client the interest earned. Compliance with the Lord Chancellor's Code of Conduct

3.9 The Lord Chancellor intends to lay down in a statutory instrument a Code of Conduct to be followed by all authorised practitioners. This will impose uniform minimum standards on them and provide a measure against which complaints should be judged. The main principles which the Government proposes should be covered are contained in the Annex to this paper.

Ability to meet claims arising out of conveyancing services

3.10 There will inevitably be claims of financial loss arising out of the provision of conveyancing services. A bad mistake can result in a purchaser acquiring a property which is worth considerably less than he paid for it - because, for example, the conveyancer overlooked a restriction on use or the planning of a new motorway. The practitioner will be required to have adequate professional indemnity insurance or other appropriate arrangements to meet such claims.

Investigation of complaints

3.11 The authorised practitioner must be able to demonstrate, where appropriate to the satisfaction of the relevant recognised authority (see para 3.18 below), that it has suitable internal mechanisms in place, appropriate to the nature and scale of its organisation, to deal with complaints and disciplinary matters.

Suitable compensation arrangements 3.12 It is not possible for anyone to insure against his own dishonesty. There will inevitably be cases where loss is caused by the dishonesty of the practitioner or, in the case of a corporate body, by its directors. The practitioner will therefore be required to be covered by a suitable compensation scheme or to have made adequate bonding arrangements.

(viii) Membership of a suitable ombudsman scheme

3.13 There will be cases where an aggrieved client is either not satisfied about the way the practitioner dealt with his complaint or wishes to complain about possible breaches of the Code of Conduct by the practitioner. Every authorised practitioner will therefore be required to belong to a suitable ombudsman scheme which provides for an independent adjudicator who must at least have powers to:-

(a) investigate the complaint provided it is within a reasonable period of time and is not vexatious or frivolous;

(b) require production of documents;

(c) order the authorised practitioner to pay the complainant compensation for the loss, expense or inconvenience caused by the action;

(d) direct the authorised practitioner to take action to correct the complaint (this could include suspending the taking on of new business for a fixed period or until the problems have been remedied); (e) require a practitioner to abide by his ruling within a specified period as a condition of membership of the scheme (in practice, this means that the practitioner will either have to accept the ruling or resign from the scheme, thereby disqualifying himself or itself from authorisation); and

(f) report to the relevant recognised or other supervisory authority where a complaint against an authorised practitioner reveals a persistent breach of the code of conduct or a systemic fault.

(ix) Adequate arrangements for protecting clients should an authorised practitioner cease providing conveyancing services.

3.14 An authorised practitioner may cease, or go out of, business for any number of reasons including death, illness, disciplinary action or bankruptcy. In the case of solicitors and licensed conveyancers who cease practice, there are statutory provisions whereby clients' money is protected, and professional colleagues may intervene in the practice in order to return papers to clients. Very often the intervening colleague is willing to take over the file of any client prepared to instruct him. Similar arrangements will be required in the case of authorised practitioners so that clients are properly protected.

(C.) Obtaining authorisation

3.15 Those who may wish to become authorised practitioners may be divided into two categories.

(i) Banks and Buildings Societies 3.16 These businesses are already regulated and subject to prudential regulation:-

(a) **Banks** An institution wishing to operate a deposit taking business must be authorised by the Bank of England under the Banking Act 1987; and

(b) **Building Societies** No building society may raise money from its members unless it is authorised to do so by the Building Societies Commission under the Building Societies Act 1986.

3.17 No bank or building society is authorised unless it is established that it is run by fit and proper persons in a prudent manner. Accordingly the Government believes that all banks and building societies should be allowed to operate as authorised practitioners provided they certify to their regulatory authorities that they can comply with all the other requirements set out in paragraphs 3.7 to 3.14.

(ii) **Others**

3.18 Others wishing to become authorised practitioners will be required to submit themselves to the supervision of an authority which can satisfy the Lord Chancellor that it is able to impose and enforce the necessary requirements set out in this paper. Such authorities will be known as recognised authorities. Some intending practitioners, such as surveyors, valuers and insurance brokers, may already be regulated by authorities which will easily be able to enforce the relevant new requirements. Others, like estate agents and the new mortgage lending companies, may find it necessary to set up new authorities or, if they wish, a single new authority, with a single ombudsman scheme. Indeed, although there will be no statutory requirement to this effect, all authorised practitioners, however regulated, might find it sensible to set up a single ombudsman scheme rather than finance a number of separate schemes. 4.1 In summary, the Government therefore proposes:—

(a) to repeal section 124 of and Schedule 21 to the Building Societies Act 1986; and

(b) to introduce legislation which will provide for the authorisation of practitioners who can satisfy the requirements set out in paragraphs 3.6 to 3.14 of this Paper.

4.2 The Government would welcome comments on these proposals. They should be sent to arrive not later than 2 May 1989 to:—

Room 417 Lord Chancellor's Department Trevelyan House 30, Great Peter Street London SW1P 2BY PROPOSED CODE OF CONDUCT: MAIN PRINCIPLES

(A.) Proper supervision of conveyancing services

1. One individual must be responsible for the direction and supervision of the conveyancing services.

Each authorised practitioner must have one named person, who is directly responsible for ensuring that the conveyancing services are carried out according to this code.

2. A sufficient number of solicitors or licensed conveyancers (or both) must be employed to enable the conveyancing services to be provided by suitably qualified persons or under their immediate supervision.

As explained in paragraph 3.7 of the paper, it will remain a requirement that the conveyancing work must be carried out by those who have the relevant professional expertise.

(B.) Conflicts of interest

3. Subparagraphs (a) and (b) below will apply in any case where the authorised practitioner is a lending institution (or is a subsidiary of a lending institution) and wishes to provide conveyancing services for any person to whom the lending institution has lent or is proposing to lend money which was or is to be applied in or towards the acquisition of an estate or interest in land. The authorised practitioner must:- (a) make it clear that independent financial advice is not available from the conveyancer; and

(b) explain the terms and conditions of the loan or offer in a clear and straightforward manner.

A conveyancer employed by a lending institution (or by an insurance company providing an endowment policy) would not be able to give independent advice, but in this he would be no different to tied agents in other financial markets. The vital consideration is that the borrower understands this. As long as he does, he will still have the option of seeking independent legal advice about alternative financial packages. It is worth pointing out, however, that under the current system it seems clear that a significant proportion of home buyers do not approach their conveyancers until they have arranged their mortgage, and do not therefore look to them for financial advice.

4. The client must be made specifically aware that information disclosed by the client to the conveyancer may be used by the authorised practitioner in respect of any other service it is providing or intends to provide.

An independent conveyancer would have a duty of confidence to the client. However, an employed conveyancer would also have a duty to his employer and must make it clear to the client that no relevant information disclosed can be kept from the employer. Such information could therefore be used by a lending institution in assessing a borrower's suitability for a loan or by a firm of surveyors in assessing whether the client will be able to pay for an expensive structural survey. 5. (a) A recognised practitioner must not provide conveyancing services in any case where the interests of the practitioner or any associate of the practitioner may conflict with those of the person making use of the services.

(b) "Associate" in sub-paragraph (a) would cover partners, subsidiary or holding companies, companies of which the practitioner is a director and, where the practitioner is an individual, any members of his family.

Clients need to be protected from situations where the interests of the authorised practitioner put at risk his duties to the client. The obvious example is where the practitioner has a direct financial interest because it owns or is seeking to buy the property in question. Principles 6 and 7 below are particular examples of where conflict is likely to arise and where, subject to certain safeguards, it may be considered that a potential conflict can be regarded as overcome.

6. (a) An authorised practitioner must not accept instructions from or continue to act for any person whose interests conflict with those of any other person by whom the authorised practitioner is also instructed.

(b) In particular an authorised practitioner must not act for both parties to a transaction except where it appears that there is no conflict of interest between the parties and both have consented in writing

(i) to its acting; and

(ii) to its ceasing to act for both parties, should a conflict of interest subsequently arise. Subparagraph (a) is a broad statement of principle. It would cover not only acting for both parties, but also a situation where the vendor (V) is selling to purchaser one (P1) who is selling to purchaser two (P2) and the authorised practitioner is instructed by V and P2. Although a conflict may be unlikely, the practitioner needs to be aware that it could arise.

Subparagraph (b) is specifically directed at acting for both vendor and purchaser. It follows the approach of the Licensed Conveyancers Practice Rules which permit licensed conveyancers to act for both parties on these very stringent conditions.

One obvious example of where a conflict may arise is where an estate agent acting on behalf of a vendor wishes to provide conveyancing services for both vendor and purchaser.

A particular problem which will need to be sorted out when the relevant rules come to be drafted is how to deal with authorised practitioners who have more than one office. This is obviously the case with most lending institutions. It may be safe to provide that in most cases where one branch office acts for the vendor and another for the purchaser each office may be treated as a separate practitioner, but equally there may need to be provisions which ensure that they act independently of one another.

7. When the authorised practitioner enters into an arrangement with another person for the introduction of clients to the authorised practitioner or by the authorised practitioner to the other person it must ensure:-

(a) that the client is informed in writing of the arrangement and of any commission or other benefit the authorised practitioner may be receiving or pay; (b) that it obtains the client's written agreement as to the destination of the commission or else it shall account to the client for the commission; and

(c) that it remains able to advise the client regardless of its own interests.

A client must be entitled to know whether the authorised practitioner is making any hidden profit or is paying any third party who referred the client to the authorised practitioner.

(C.) Contractual obligations

8. An authorised practitioner must give to each client, before it may accept instructions to act, an estimate of the total cost which the client will or may have to meet. This must set out

(a) the way in which fees will be calculated;

(b) the circumstances in which they might be increased; and

(c) the particulars of expenses and tax likely to be charged to the client

Clients must be entitled to know before they enter into a contract with the authorised practitioner what the likely cost of the transaction will be.

When the authorised practitioner is a lending institution and offers to add the cost of the conveyancing transaction to the loan, it must give the client an indication of what he is likely to pay over the period of the loan compared to what he would pay if he met the cost on completion. Any such lending institution, which has offered to add the cost of the conveyancing transaction to the loan, must also be ready to do this, whether the client chooses to use that lending institution or an independent conveyancer to carry out the conveyancing transaction.

9. When an authorised practitioner offers conveyancing and other services to a client it must ensure that the statement required under Principle 8 sets out separately the cost of each service.

The client needs to be able to make an informed choice between the cost of in-house and independent conveyancing services.

10. Authorised practitioners must not offer conveyancing services below their true cost and must provide annual proof that they are complying with this requirement.

The Government is anxious to ensure that the competitive position of independent conveyancers is not put at risk by authorised practitioners subsidising the provision of conveyancing services by their other activities. It therefore requires authorised practitioners not to offer conveyancing services below their true cost. Authorised practitioners must be able to demonstrate this at least once a year to the satisfaction of their auditors who must certify that this condition is being met.

11. An authorised practitioner must not make the provision of:

(a) conveyancing services conditional on any other service being taken; or (b) any other service conditional on conveyancing services being taken.

Such a prohibition against "tying-in" is essential. There is an obvious risk that, for example, a lending institution will tie in the conveyancing services to the loan, thus making the borrower accept the whole package. Since the loan is so vital, this would effectively prevent the borrower from seeking independent legal or financial advice. Similarly, although the client would feel under less pressure to accept, a surveyor might wish a client to accept a combined estate agency/survey/conveyancing package. If this were permitted, it might well force independent conveyancers out of business and so reduce competition.

12. An authorised practitioner must not contractually limit its liability for damage suffered by the client as a result of negligence on its part.

13. An authorised practitioner must set out in writing the terms upon which instructions will be accepted and give them to the client before accepting instructions.

(D.) Conduct of business

14. An authorised practitioner must deal with correspondence and other matters arising in the course of a conveyancing transaction with reasonable speed and must not by his actions or omissions cause unnecessary delay.

Authorised practitioners will be required to act in a professional manner. These purpose of this and the following principles is to ensure that this happens. These principles will:- CONFIDENTIAL

(a) help to avoid any conflict between the authorised practitioner and the employed professional conveyancer by imposing the same rules of conduct as the professional conveyancer would expect to meet in private practice;

(b) demonstrate to independent conveyancers acting for other parties that authorised practitioners are not exempt from the usual professional standards; and

(c) offer guidance to ombudsmen and other interested parties in the case of complaints.

15. An authorised practitioner must ensure that clients are kept adequately informed of the progress of the transaction.

Failing to keep clients properly informed causes misunderstanding and anxiety. It leads to mistakes and complaints.

16. An authorised practitioner must treat all facts and information concerning the client obtained by it in the course of acting for the client as confidential and must not at any time make any unauthorised use of such facts or information.

17. An authorised practitioner must not delay completion of any transaction solely on the ground that its fees are outstanding.

18. An authorised practitioner must comply fully with every undertaking given on its behalf during any conveyancing transaction.

19. When an authorised practitioner is instructed by a vendor to submit forms of contract to more than one prospective purchaser, it must obtain the client's authority to disclose this fact to all prospective purchasers. If that authority is not given, it must withdraw from the transactions.

20. An authorised practitioner must not withdraw from transactions without good cause.

An authorised practitioner must not cease to act merely because it no longer wishes to represent a client. There should be a good reason for its withdrawing, for example because a conflict of interest is discovered or the authorised practitioner is unable to obtain instructions from the client. CABINET

DRAFT WHITE PAPER ON THE REFORM OF THE NATIONAL HEALTH SERVICE

Note by the Secretary of the Cabinet

The draft White Paper on the Reform of the National Health Service was circulated to all members of the Cabinet under the memorandum by the Secretary of State for Health - E(A)(89) 2. The Sub-Committee on Economic Affairs of the Ministerial Steering Committee on Economic Strategy approved the White Paper in principle at its meeting this morning and the White Paper will be considered by the Cabinet on 26 January. It is not being re-circulated as a separate Cabinet paper.

Signed ROBIN BUTLER

Cabinet Office 24 January 1989 CABINET

ECONOMIC STRATEGY

Memorandum by the Chancellor of the Exchequer

The United Kingdom economy, which saw above average growth in 1987, continued to grow rapidly in 1988, largely as a result of an investment boom, but also reflecting continued strong consumer demand. With profitability now at its highest levels since the 1960s and with continued rapid growth in productivity, companies are in a very strong position and have been investing heavily to meet future demand. Consumers have seen their real incomes rise significantly and have felt more confident about the future; as a result they have been prepared to finance their spending by borrowing more.

02. The upshot is that total domestic demand has risen faster than the economy's capacity to supply, leading to a re-emergence of inflationary pressure, manifesting itself both directly in a pick-up in the underlying increase in the Retail Price Index (RPI), and indirectly in a sharp growth in imports and hence a widening current account deficit.

03. Since the summer, monetary policy has been tightened substantially to deal with the emerging inflationary pressure. The evidence from retail sales, from the housing market and from the narrow indicators of monthly growth (MO) is that this tightening is starting to bring the economy back to a sustainable path, but there is still some way to go, on inflation in particular. The RPI exaggerates the extent of the rise in prices because of the perverse inclusion of mortgage interest payments. But even so, getting inflation on to a clear downward path will mean keeping interest rates high for some time. Fiscal policy has been considerably tighter than forecast over the past year and we now seem set for a Public Sector Debt Repayment (PSDR) appreciably greater than the £10 billion I indicated in the Autumn Statement.

04. I am sure, in the circumstances, that we must aim for a cautious approach to the Budget. Sound and prudent financial policies are essential if we are to maintain the confidence of the markets and sustain the improvement in economic performance of recent years. If we succeed in reversing the recent rise in inflation, while containing our policies to improve the efficiency and flexibility of the economy, the prospect remains a very good one. ECONOMIC PROSPECTS

05. As in the United Kingdom, growth in the rest of the world in 1988 was more buoyant than forecast a year ago, exceeding expectations in each of the major industrial countries, in most cases substantially so. World trade in manufactures probably grew by 10 per cent. Even those European economies that have been sluggish in recent years are now experiencing faster growth. Partly as a result, consumer price inflation edged up a little in a number of countries and most commodity prices have risen.

06. The latest indicators suggest that activity in the major economies remains strong, though increases in short term interest rates to counter rising inflation may lead to some slow down through 1989. Gross National Product growth may fall from 4 per cent in 1988 to a still healthy 3 per cent this year. World trade growth should still be high.

07. One threat to this prospect is that the persistence of sizeable current account surpluses between the largest economies could lead to renewed turmoil in financial markets. Domestic demand growth in the United States needs to slow, and the United States Government needs to reduce its Budget deficit. At the same time, the surplus countries - Germany and Japan - need to remove the obstacles which restrict the growth of their domestic markets.

08. The United Kingdom has experienced a sharper acceleration of output than most of its Group of Seven partners, with unemployment falling faster than in any other major country. In spite of the major problems in interpreting recent macroeconomic statistics it looks as if we have now had two successive years with Gross Domestic Product growth at about 4½ per cent, the first time this has happened since the mid-sixties. Domestic demand probably grew considerably more quickly than this in 1988, mainly because of the strength of investment, but also reflecting continued rapid growth in consumer spending. It seems likely that the growth of total fixed investment will have been well into double figures last year - the largest increase for almost 20 years. Indeed once the full figures are available it is possible that growth of investment even surpassed that recorded in 1964 - hitherto the best year for investment growth since the War. At the same time, productivity in manufacturing has continued to grow rapidly.

09. Apart from fixed investment, the housing market has been the other major source of the rapid growth in domestic demand. A significant house price bubble emerged last year and with it a rapid turnover in housing. It is likely this had a significant effect on consumption in general and spending on durables in particular.

10. As already mentioned, the increase in inflationary pressure has been countered by the only effective means: a tightening of monetary policy via higher short term interest rates. There are now increasing signs that this firm action has begun to check the growth of spending by households. Growth of the narrow measure of the money supply, M0, has begun to slow down appreciably. The housing market has cooled down markedly, particularly in the South East, with both house prices and lending for... house purchase rising much less rapidly than in the middle of last year, and showing signs of falling in some areas. The growth of retail sales in general has moderated, and sales of some consumer durables have fallen. Indicators of consumer confidence suggest that expenditure growth in the year ahead will be modest. The personal sector savings ratio should as a result begin to recover.

11. Meanwhile, company sector saving remains high and the signs are that the very strong investment performance of the last two years will continue in 1989, though growth will probably be at a less heady pace. The rate of return on capital is at its highest level for over twenty years, and the extra investment that this is generating will help to underpin the supply side improvements of recent years.

12. The latest rise in the mortgage rate will almost certainly lead to inflation as measured by the RPI rising above 7 per cent for some months (although excluding mortgage interest payments the rate should remain below 6 per cent). As the effects of the rises in mortgage rates during the last year begin to drop out, RPI inflation itself should fall back to well below 7 per cent by the fourth quarter of this year. The rise in inflation during the first half of this year will undoubtedly cause us considerable problems. We must clearly do everything in our power to ensure that it does not lead to a pay explosion.

13. The underlying rate of inflation - whether measured by the RPI less mortgage interest payments or by producer prices - is lower, but still much too high. We will have to maintain the present very tight monetary policy long enough to ensure that it is put firmly on a steady downward trend.

14. The sharp worsening of the current account deficit may be exaggerated to some extent by the published figures. The preliminary estimate published for 1988 is £14 1/4 billion, but the (positive) "balancing item" in the balance of payments - which consists of unrecorded flows to the United Kingdom - for the first three quarters (the latest available period) was even greater than the recorded deficit. Nevertheless, the current account deficit remains a large one. The slowdown in domestic demand will lead to its reduction, but this is unlikely to occur quickly. The continued strong growth of investment could keep imports of capital goods high for the time being, and it may take a little while for the adverse effects on trade performance of very high capacity utilisation in some industries to unwind. Even though the deficit could well fall during the coming year, the outturn for 1989 as a whole might be much the same as that for 1988.

15. To summarise, following a prolonged period of above average growth the likelihood is that growth will be well below trend over the coming year. GDP in 1989 could still be 2 1/2 per cent higher than in 1988, though with the statistics for the recent past in such disarray and the economy at a turning point the forecast is even more uncertain than usual. FISCAL PROSPECTS

16. In last year's Budget I announced major tax reforms, including cuts in both the basic and higher rates of income tax. Yet despite this I budgeted for a PSDR in 1988-89 of some £3 billion, or 3/4 of a per cent of GDP. In the event, the public finances have turned out considerably stronger. The forecast I gave in the Autumn Statement was for a PSDR of £10 billion, or 2 per cent of GDP. Later information suggests that the surplus will comfortably exceed even this.

17. This remarkable improvement in the fiscal position - no other major country enjoys a comparable surplus - owes much to the buoyancy of the economy, as well as somewhat higher privatisation proceeds than originally planned. Given the continuing strength of domestic demand, the need for a cautious approach to policy, and market expectations, it is essential to maintain a prudent fiscal stance. In present circumstances I believe we must aim for another sizeable PSDR in the coming financial year.

18. Thus despite the massive Budget surplus the scope for reductions in taxation must inevitably be limited this year. It may prove best to do little more than offset the natural tendency for the non-oil tax burden to rise as a result of fiscal drag. Looking further ahead, the return to a sustainable growth rate is likely to lead to some reversal of the favourable cyclical effects on public finances which we have recently experienced. So future reductions in taxation will depend crucially on our continued ability to restrain the growth of public expenditure.

SUMMARY AND CONCLUSIONS

19. Output growth in the last two years has been faster than we can sustain in the medium term. Some slowdown is inevitable. With the current account likely to improve only rather slowly, we must avoid taking any risks which damage the credibility of our policies. This means a cautious Budget and a further year of substantial budget surplus.

20. I would welcome colleagues' views on the Budget against the background of the fiscal and economic prospects I have outlined.

N L

Treasury

14 February 1989

### Table: Economic Indicators

| Year | 1981 | 1982 | 1983 | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | |------|------|------|------|------|------|------|------|------|------| | GDP, (2) in % change | 1½ | -½ | 3 | 5 | 3½ | 2½ | 3½ | 4 | 3 | | GDP, (2) per cent change | -1 | 1¼ | 3½ | 1½ | 3½ | 3½ | 4½ | 4½ | 2½ | | Elastic demand, (2) per cent change | -1½ | 2½ | 4½ | 2½ | 2½ | 4 | 4½ | 7 | 2½ | | Oil prices Q4 per cent change | 12 | 6 | 5 | 5 | 5½ | 3½ | 4 | 6½ | 5½ | | Interest rates average 3-month interbank | 14 | 12½ | 10 | 10 | 12 | 11 | 9½ | 12½ | 12 7/8 (3) | | Employment, per cent of working population including school leavers | 8½ | 10 | 11 | 11 | 11 | 11½ | 10½ | 8½ | 7½ | | Retailing index | 117 | 113½ | 105½ | 100½ | 100 | 91½ | 90 | 95½ | 97½ (3) |

(1) Provisional pre-Budget figures (2) At constant prices (3) February 6 ANNEX 2: DIRECT EFFECTS OF TAX CHANGES

A. Direct Taxes: Indexation

The RPI increased in the year to December 1988 by 6.8 per cent. With indexation by this amount and statutory rounding, the figures for the main allowances and other thresholds would be:

| Allowance | 1988-89 | 1989-90 | |----------------------------------|---------|---------| | Single and wife's earned income allowance | 2,605 | 2,785 | | Married allowance | 4,095 | 4,375 |

Tax rate bands

| Rate | 1988-89 | 1989-90 | |--------|---------|---------| | 25% rate | 19,300 | 20,700 | | 40% rate | over 19,300 | over 20,700 |

The total revenue cost of indexation of income tax (included in the forecast) is £1,455 million in 1989-90.

B. Indirect Taxes: Indexation

The effects of 6.8 per cent revalorisation of the excise duties (including VAT effects) are as follows:

| Product | VAT inclusive price change | Yield in 1989-90 £m | RPI impact % points | |------------------|---------------------------|----------------------|---------------------| | Beer | 1.5p/pint | 140 | 0.07 | | Wine | 6.0p/75cl light wine | 45 | 0.04 | | Spirits | 37.0p/bottle | 65 | 0.04 | | Tobacco | 6.5p/20 king size | 235 | 0.14 | | Petrol | 7.3p/gallon | 440 | 0.12 | | Derv | 6.1p/gallon | 95 | 0.01 | | VED | £6.80/car | 155 | 0.05 | | Overall effect, (including minor duties) | 1225 | 0.48(1) |

(1) Figures do not sum due to rounding

### C. Ready Reckoners: Illustrative Tax Changes

| | £ million | |----------------------|-----------| | **1989-90** | **1990-91**| | **INCOME TAX** | | | **Allowances and Thresholds** | | | 1% above indexation on all statutory allowances | 180 | 235 | | 1% above indexation on all statutory allowances and basic rate limit | 205 | 270 | | **Rates** | | | Change basic rate by 1p | 1,400 | 1,725 | | Change higher rate by 1p | 100 | 205 | | **CORPORATION TAX** | | | Change in main rate of 1 percentage point | 420 | 650 | | Change in small companies' rate of 1 percentage point | 30 | 50 | | **VALUE ADDED TAX** | | | Change in VAT rate of 1 percentage point(^{(1)}) | 1,300 | 1,830 |

(^{(1)}) A 1% change in the VAT rate would change the RPI by 0.45% ANNEX 3: PUBLIC FINANCES AND THE TAX BURDEN

Taxation, Expenditure and Borrowing

Since the Government first took office, total taxes and NICs have risen by 4 percentage points of GDP, though the ratio has fallen from its peak in 1981-82. This has enabled us to make net repayments of government debt in the last two years.

Table 1

Overall Taxation, Expenditure and Borrowing (percentage of GDP at market prices\*)

| Year | Non-North Sea Taxes plus NICs (as per cent of non-North Sea GDP) | Total Taxes plus NICs | General Government Expenditure (excluding privatisation proceeds) | PSBR | |---------|---------------------------------------------------------------|----------------------|-----------------------------------------------------------------|------| | 1978-79 | 34.2 | 33.9 | 43.3 | 5.3 | | 1979-80 | 35.1 | 35.1 | 43.5 | 4.8 | | 1980-81 | 36.2 | 36.3 | 46.1 | 5.3 | | 1981-82 | 38.7 | 39.3 | 46.6 | 3.3 | | 1982-83 | 38.1 | 38.9 | 46.8 | 3.1 | | 1983-84 | 37.7 | 38.5 | 45.9 | 3.2 | | 1984-85 | 37.8 | 39.1 | 46.2 | 3.1 | | 1985-86 | 37.1 | 38.5 | 44.5 | 1.6 | | 1986-87 | 37.8 | 38.1 | 43.7 | 0.9 | | 1987-88 | 37.6 | 37.9 | 41.6 | -0.9 |

[\*Treasury estimates for 1986-87 and 1987-88]

Personal Taxation

2. Despite reductions in income tax, total personal taxes (direct and indirect, including employees' NICs and domestic rates) in 1988-89 are over £30 billion higher in real terms (ie 1988-89 prices) than they were in 1978-79. For income tax and national insurance contributions the following table shows how the proportion of gross pay they represent rose up to 1981-82:

Table 2

| Year | ½ average earnings | average earnings | 2 average earnings | |----------|--------------------|------------------|--------------------| | 1978-79 | 16.0 | 27.8 | 31.4 | | 1981-82 | 20.8 | 29.3 | 32.2 | | 1982-83 | 20.8 | 29.8 | 32.3 | | 1983-84 | 20.1 | 29.6 | 31.7 | | 1984-85 | 19.3 | 29.2 | 31.5 | | 1985-86 | 18.9 | 29.0 | 31.5 | | 1986-87 | 18.9 | 28.5 | 30.9 | | 1987-88 | 19.1 | 27.6 | 29.9 | | 1988-89 (estimate) | 18.5 | 26.3 | 28.2 | | 1989-90 (indexation) | 18.6 | 26.3 | 28.3 |

\*Adult male earnings (all occupations). Married couple, wife not working: the couple are assumed to have no children, to avoid distortion of the figures from the abolition of child tax allowances.

3. These figures reflect the rise in the standard employees' NIC rate from 6½ per cent to 9 per cent. The lower rates introduced in the 1985 Finance Act do not affect the cases shown. So far as income tax is concerned, personal allowances have increased by about 25 per cent in real terms since 1978-79, slightly less than earnings. The basic rate has been reduced from 33p to 25p.

4. Average earnings have of course increased by substantially more than prices since 1978-79. So a married man on average earnings has seen his real take-home pay rise by £45 per week. The increase for a married man on half average earnings has been £22 per week, and on twice average earnings £94 per week.

5. As the table shows, indexation of allowances in the Budget, with no reduction in the basic rate, would lead to a very slight rise in the proportion of incomes taken in tax and NICs. This is because earnings are assumed to rise by more than the increase in tax thresholds, which is indexed to changes in prices.

Business Taxation

6. Following the sharp rise in corporation tax receipts over the past three years, as a result of the substantial recovery in company profits, total taxes paid by businesses (outside the North Sea) are now higher as a percentage of GDP than in 1978-79. Within this total, the major change has been a fall in employers' NICs (and NIS) as a "percentage of GDP, offset by increases in corporation tax, business rates and 'other' taxes as the following table shows:

Table 3

| Corporation Tax | Taxes on self employment incomes | Employers' NICs and NIS | Rates | Other | Total | |-----------------|---------------------------------|-------------------------|-------|-------|-------| | 1978-79 | 8.3 | 2.8 | 13.6 | 5.5 | 4.3 | 34.4 | | | (2.2) | (0.7) | (3.6) | (1.4) | (1.1) | (9.1) | | 1988-89 (estimate) | 15.9 | 3.7 | 13.0 | 8.1 | 7.4 | 48.1 | | | (3.4) | (0.8) | (2.7) | (1.7) | (1.6) | (10.2)|

1 Excludes North Sea, but includes ACT 2 VED, car tax, road fuel duty, duty on rebated oils, capital taxes The Prime Minister has now received all the reports from the Review bodies. They have recommended the following increases from 1 April 1989:

| Review Body | Pay bill increase | Range of increase | UK public expenditure Cost (1) £m | |--------------------------------------------------|-------------------|-------------------|-----------------------------------| | Armed Forces (APPRB) | 8.8 | 5-8 | 272 | | Doctors & dentists (DDR) | 8.8 | 8-14.1 | 312 | | Clinical academics (consequence of DDRB) | 10.8 | 8-13.6 | 8.5 | | Professions allied to medicine (PAM) | 7.7 | 7.6-7.8 | 43 | | Nursing staff, midwives and health visitors | 6.8 | 6.7-6.9 | 420 | | Top salaries (TSRB) | 6.5 | 4.9-10.6 | 6 |

(1) The figures for public expenditure cost differ from those in the review bodies' reports. Their figures do not include some costs which count as public expenditure.

(2) Includes £39m for practice expenses of family practitioners.

(3) These mainly represent across the board increases of 7.7% and 6.75%. Three Chief Area Nurses grade 4 in Scotland will get increases of 10-13.6%. All other nurses and midwives will get increases within the ranges shown.

(4) Includes £5m recommended for flexible pay experiments and £3m for new grading structure for educational grades, which the Review Body will be asked to price within the next few months. (5) Does not allow for recommendation to increase from 25% to 35% the quota of civil servants in Grades 2 and 3 eligible for discretionary increments. The figure for the pay bill increase does however allow for this. The figure given for the range of increases also excludes restructuring for 13 Immigration Adjudicators who receive increases of 27.1%, and for the Chief Immigration Adjudicator and the Vice-Presidents of the Immigration Appeal Tribunal, who get 28.3%.

TSRB report

2. The TSRB recommendations break down as follows:

i. a basic 5% increase for all groups;

ii. for the judiciary, some minor restructuring which would bring the pay bill increase to 5.2%;

iii. for senior officers in the armed forces, 2-star officers would be linked to the Grade 3 first performance point rather than the top of the Grade 3 scale, as at present. The pay bill increase for 2-star officers would be 10.5% and for senior officers as a whole 8.6%.

iv. for the civil service, structural changes to relate pay more closely to performance would be deferred but the quota of staff eligible for discretionary increments would rise from 25% to 35%. It is unlikely that the whole of the proposed increase in the quota would be taken up in the first year, but if it were, the additional cost in 1989-90 would be about £75,000, and about £150,000 in a full year which is about 1/2% of the pay bill for Grades 2 and 3. Otherwise, the only exception to the 5% basic increase would be the restoration of a London allowance for Grade 3s, at £2,000, a possibility to which the Government drew the TSRB's attention. The increase in the pay bill for Grade 3s would be 3.5% and for the whole group 8.2%.

DDRB report

3. The DDRB have recommended a basic 6% increase for all doctors and dentists in the NHS, with the following additions:

i. an increase of £1,000 in the top of the consultants' scale, thus raising it by 10.8%. All distinction awards (except the A+ awards - paragraph 3ii below) would as a result also increase by 10.8%, since their size is related to the consultant maximum. This recommendation would add £17m to the DDRB pay bill (£14.6m for the direct salary cost, £2.4m for the effect on distinction awards).

ii. an increase in the A+ distinction award from 95% to 100% of the consultant scale maximum. Consultants enjoying this award as well as the increase at the top of the scale would get 13.6%. The cost would be £0.3m;

iii. a small increase in the number of the higher distinction and meritorious service awards. The cost would be £1.7m; iv. an additional point at the top of the Senior House Officer Scale, recommended by both sides, and costing £0.8m. Those covered would get an increase of 14.18;

a reduction in the number of working hours at which junior hospital doctors qualify for increased on-call allowances. Since this is designed to encourage authorities to reduce the hours worked, it is recommended that it be treated as a nil cost item.

Pay and price movements elsewhere

4. The Review Bodies' recommendations compare with:

i. a year-on-year increase in underlying average earnings for the whole economy of 8.75% in November;

ii. an average level of settlements for the whole economy since the start of the pay round (covering 30% of employees) of 6.25%. In the private sector the figure is 6.5%;

iii a year-on-year increase in the RPI of 6.8% in December.

PROPOSALS

05. Ministers directly concerned have discussed what the response of the Government should be to the Review Body reports, taking account of views by the Secretary of State for Wales in a minute to the Prime Minister dated 13 February. They have reached the following conclusions and recommendations for consideration by the Cabinet.

06. The recommendations of the Review Bodies on the Armed Forces, Professions Allied to Medicine and Nurses and Nursing Staff, Midwives and Health Visitors should be accepted in full.

07. The recommendations of the Top Salaries Review Body should also be accepted in full, subject to one point. The Review Body recommended that the pay of 2-star officers should be linked to the first performance point for Grade 2 civil servants. Ministers consider that it would be wrong in principle to link pay which has no performance element to a performance point. On the other hand, they also thought that 2-star officers should receive a salary at about the level recommended by the TSRB, and that a link between the pay of senior officers and of civil servants must be retained. They came to the view that the pay of 2-star officers should be around 85% of the normally attainable maximum of Grade 2 civil servants (which is also the pay point for 3-star officers). This would give 2-star officers a salary at the level recommended by TSRB.

08. The recommendations by the Doctors and Dental Review Body should also be accepted, except for increases, in addition to the general 8% increase, at the top of the consultants' scale and in the size of consultants' distinction awards (paragraphs 3i and 3ii above). Ministers were of the view that these recommendations would produce big increases for consultants and that the Review Body's stated objective of improving the long-term career structure for hospital doctors would be achieved by the proposal in the White Paper, "Working for Patients", to create 100 additional, permanent consultant posts over the next 3 years. The recommendation to increase the number of distinction awards (paragraph 3iii above) should however be accepted.

09. As to financing, the cost of the awards by the Top Salaries Review Body and the Armed Forces Pay Review Body can be afforded within current provision. The awards for the NHS groups would involve a cost of £248m in excess of current provision, after allowing for the abatement for consultants described in paragraph 8. £62m of this is for the Family Practitioner Service, and falls on the Reserve. Of the £186m cost falling on the Hospital and Community Health Services, £44m would be met from within the NHS, with the remaining £142m coming from the Reserve. Last year the Government met the excess cost of the Review Body awards in full, and Ministers thought it important to establish the principle that this would not necessarily happen every year.

10. The cost of clinical academics is kept in line with that of DDRB groups but falls on the DES. The cost in excess of provision, after allowing for the abatement for consultants, would be £2.8m, which would be met from the Reserve.

11. There is no Parliamentary process for the Review Body reports, except that an Order is necessary to maintain the differential between the Lord Chancellor's salary and the Lord Chief Justice's, in accordance with declared Government policy. This requires an Affirmative Resolution in both Houses of Parliament and has in the past created an opportunity for debate on the whole TSRB report. Ministers thought that the Government should use the opportunity of next Session's Bill on Parliamentary pensions to remove this requirement.

Teachers' Pay

12. The Secretary of State for Education and Science has received the report of the Interim Advisory Committee on School Teachers' Pay and Conditions (IAC). They recommend increases for school teachers in England and Wales from 1 April 1989 that would add 6.3% to the pay bill. The main recommendations are for:

i. a 6% increase in the Main Professional Grade from 1 April 1989.

ii. a 7% increase in the value of incentive allowances from 1 April 1989.

iii. a 7.5% increase in the spot salaries of heads and deputies from 1 April 1989.

iv. a 5.6% uplift in London Weighting from 1 July 1988.

vi. an additional 9,500 incentive allowances in 1989-90.

Ministers were of the view that the IAC recommendations should be accepted, but that the Government should not pay local authorities extra grant to finance them.

Announcement

13. Ministers consider that there is a strong case for announcing the Government's decisions quickly. Decisions on Review Body Reports have generally been announced by way of a Written Answer to an arranged Parliamentary Question. Arrangements have been made to put down a Written Question for answer tomorrow, Thursday 16 February. If the Cabinet approve the proposals described in this note, the Prime Minister will announce the decisions in an Answer on the lines of the draft attached at Annex A, which will become public at 4pm tomorrow afternoon. At the same time, the Secretary of State for Education will announce the decisions on the IAC report by way of another written Answer, of which a draft is at Annex B.

ROBIN BUTLER

Cabinet Office 15 February 1989 The 1989 reports of the Review Bodies on the pay of Nursing Staff, Midwives and Health Visitors, and Professions Allied to Medicine, the Doctors and Dentists, and the Armed Forces, and of the Top Salaries Review Body, have been published today. Copies are now available in the Vote Office. The Government are grateful to members of the review bodies for these reports and the time and care which they have put into their preparation.

The following table shows the increases in pay rates recommended by the review bodies, and their cost:

| Review Body reports | Pay bill increase, per cent. | Range of increase, per cent. | UK Public Expenditure Cost (£ Million) | |--------------------------------------|------------------------------|------------------------------|---------------------------------------| | Armed Forces | 6.8 | 5-8 | 272 | | Doctors and dentists | 8.8 | 8-14.1 | 312 | | Professions allied to medicine | 7.7 | 7.6-7.8 | 43 | | Nursing staff, midwives and health visitors | 6.8 | 6.7-6.9 | 420 | | Top salaries | 6.5 | 4.9-10.6 | 6 |

(1) The figures for public expenditure cost differ from those in the review bodies' reports. Their figures do not include some costs which count as public expenditure. The figure for doctors and dentists includes payments for GPs' expenses, not counted as pay. The figure for nurses includes £5m for the flexible pay experiment and an estimated £3 million for a new grading structure for educational grades, which the Review Body has not yet costed.

(2) Three Chief Area Nurses grade 4 in Scotland will get increases of 10-13.6%.

(3) This figure does not allow for the recommendation to increase from 25% to 35% the quota of civil servants in Grades 2 and 3 eligible for discretionary increments. The figure for the pay bill increase does however allow for this. The figure given for the range of increases also excludes restructuring for 13 Immigration Adjudicators who receive increases of 27.1%, and for the Chief Immigration Adjudicator and the Vice-Presidents of the Immigration Appeal Tribunal, who get 28.3%. The Government have decided to accept in full the Review bodies' recommendations on the armed forces, on professions allied to medicine, and on nursing staff, midwives and health visitors.

The Government have also decided to accept the recommendation of the review body on doctors and dentists for a basic increase of 8% for all the groups covered. In the Government's view the creation of 100 additional permanent consultant posts over the next 3 years, as proposed in the White Paper, "Working for Patients", will best achieve the objective of improving the long-term career structure for hospital doctors. The creation of these posts will therefore take the place of the increases recommended, in addition to the 8% basic increase, at the top of the consultants' scale and in the size of consultants' distinction awards. Subject to this, the Government accepts the Review Body's recommendations.

The Government have decided to accept the recommendations of the Top Salaries Review Body in full, except that they consider that the pay of 2-star officers should be around 85% of the normally attainable maximum of Grade 2 civil servants (which is also the pay point for 3-star officers) rather than linked to a performance point for Grade 3 civil servants. This would give the 2-star officer a salary at the level recommended by the TSRB.

The full cost of the awards by the Armed Forces Pay Review Body and Top Salaries Review Body groups will be met from within existing public expenditure programme totals for this year. In the case of the health services however the Government recognise that the full costs could not be accommodated without adversely affecting services to patients. The Government have therefore decided to provide an extra £142m for health authority cash limits from the Reserve for next year. Of the remaining cost, £417m is already fully covered within the allocations made for this year, leaving a balance of £44m to be covered from cost improvements. The Government have similarly decided to provide an additional £62m to the Family Practitioner Services from the Reserve for this year. Together with the increases in allocation already announced, the increase in provision for the National Health Service in 1989-90 over 1988-89 will therefore be £1899m.

The pay rates and scales resulting from the decisions will be promulgated as soon as possible for all the groups concerned. DRAFT PQ ON IAC REPORT ANNOUNCEMENT

Question: To ask the Secretary of State for Education and Science, when the second Report of the Interim Advisory Committee on School Teachers' Pay and Conditions will be published.

Answer:

MR KENNETH BAKER

It is being published today. Its main recommendations are

- a 6% increase in the main pay scale for teachers from 1 April 1989
- a 7% increase in the value of the five rates of incentive allowances from 1 April 1989
- a 7.5% increase in the salaries of the 55,000 Heads and Deputies from 1 April 1989
- an extra 9,500 incentive allowances for the 1989-90 academic year, on top of the additional 18,000 already planned
- a 5.6% increase in London allowances from 1 July 1988.

I propose to accept the Committee's recommendations in full. I am today initiating the consultation required by Section 3(1) of the Teachers' Pay and Conditions Act 1987 by writing to the relevant local authority associations, teacher unions and bodies representing the interests of the governors of voluntary schools, setting out my proposals. The text of the letter is as follows:

[text of consultation letter] LETTER FROM THE SECRETARY OF STATE FOR EDUCATION AND SCIENCE TO THE RELEVANT LOCAL AUTHORITY ASSOCIATIONS, TEACHER UNIONS AND BODIES REPRESENTING THE INTERESTS OF THE GOVERNORS OF VOLUNTARY SCHOOLS

TEACHERS PAY AND CONDITIONS OF EMPLOYMENT

1. On 14 September 1988 I asked the Interim Advisory Committee on School Teachers Pay and Conditions to examine and report to me on certain issues. I enclose a copy of the Committee's report which is being published today. The Committee's recommendations are summarised in Chapter 9 of its report. I propose to make an Order giving effect to the recommendations referred to in paragraphs 2 - 3 below. But before I take a decision on what provision the order should make, I invite your views. This letter therefore initiates the consultation required by Section 3(1) of the Teachers' Pay and Conditions Act 1987.

2. I propose to accept the Committee's recommendations that

i. the salaries of all qualified teachers should be raised by a uniform 6% to the figures set out in paragraph 4.13 of the Committee's report with effect from 1 April 1989;

ii. the salaries of unqualified teachers should be raised by the same percentage, (paragraph 4.13). The allowance for teachers of the visually impaired and hearing impaired would also be increased by 6%;

iii. the spot salaries for Heads and Deputies should be increased by 7.5% with effect from 1 April 1989, (paragraph 4.21);

iv. the rates of the London area allowances should be increased by 5.6% with effect from 1 July 1988, (paragraph 5.16); v. the value of each of the incentive allowances should be increased by 7% with effect from 1 April 1989, (paragraph 4.34);

vi. the planned number of incentive allowances should be expanded from September 1989 by 9,500 (5,000 extra A allowances; 2,500 B allowances; 1,500 C allowances and 500 D allowances): (paragraphs 4.31 and 4.32). There will need to be some consequential revisions to the limits relating to incentive allowances in Annex A to Appendix I of the School Teachers Pay and Conditions Document 1988, (paragraph 4.33).

3. The Committee makes a number of other recommendations which would require amendments to the School Teachers' Pay and Conditions Document 1988 (the 1988 Document):

a. that teachers returning to regular full-time or part-time teaching should be paid on re-entry at no lower point on the mainscale than when last employed as a regular full-time or part-time teacher (paragraph 5.21)

b. that, contingent upon the introduction of the proposed licensed teacher arrangements, there should be discretion for local authorities or governors, as appropriate, to pay licensed teachers at either qualified or unqualified rates (paragraph 5.26)

c. that local authorities (and, at the appropriate point, governors of schools with delegated budgets) should be given discretion to accelerate a teacher's progression to the top of the mainscale (paragraph 5.29)

d. that once the necessary regulations under Section 218 of the Education Reform Act have been made, a teacher who is awarded Qualified Teacher Status (QTS) retrospectively should be entitled to receive back pay from any authority he/she has worked for from the date from which his/her qualification runs, to make good any difference between what he/she was actually paid up to the point when QTS was awarded and what he/she would have been entitled to as a qualified teacher (paragraph 5.41)

e. that the discretions over pay and conditions currently exercised by local education authorities set out in Appendix I of the report should be transferred to governing bodies of schools with budgets delegated under Chapter III of Part I of the Education Reform Act 1988 (paragraph 7.24) and that the decision on whether it is "reasonably practicable to provide a supply teacher" should transfer to the governors in those schools where the governing body have been made responsible, under the relevant LMS scheme, for managing the arrangements for providing supply teachers (paragraph 7.26)

f. that the functions, both mandatory and discretionary, currently allocated to LEAs under the 1988 Document should be allocated to governing bodies of grant maintained (GM) schools (paragraph 7.28)

g. that where a GM school was formerly a voluntary school, a head teacher should carry out his/her professional duties in accordance with any trust deed applying to the school (paragraph 7.29)

h. that salary safeguarding on a discretionary basis and discretionary safeguarding on London allowance and social priority allowance should apply in both directions between a GM school and its former maintaining authority (paragraph 7.31)

i. that the provision in relation to cover at sub paragraph 35(9)(b)(ii) of the 1988 Document should be amended in the direction of wording suggested by the Professional Association of Teachers (paragraph 8.9)

j. that the reference to payment for midday supervision at paragraph 23 of the 1988 Document should be deleted (paragraph 8.14)

k. that the reference to education legislation in the "overriding requirements" section of head teachers conditions of employment - paragraph 27(i) of the 1988 Document - should be updated to include the Education Reform Act 1988 (paragraph 8.24)

l. that specific reference should be made in both head teachers and schoolteachers conditions of service to the Basic (including National) Curriculum, and, in the case of head teachers, to the collective worship requirements of the Education Reform Act (paragraph 8.25)

I propose to accept all these recommendations.

4. The Order I propose to make to give effect to all of the above would do so by bringing into effect a new School Teachers' Pay and Conditions Document. The Committee's remaining recommendations do not require changes to the 1988 Document: I do not therefore propose to change the document in response to those recommendations. Nor is it intended to revise the RSG settlements for 1989-90 on account of the proposals set out in paragraphs 2 and 3 above. The cost will be offset in part by the greater than expected reduction in the employers' contributions to the Teachers Superannuation Scheme which I announced on 10 February.

5. Any comments on the proposals set out above and on any other matters raised in the report are invited by 10 March. If you would like to express your views in a meeting would you let my office know of this as soon as possible so that any meetings can take place before Easter.

6. Following these consultations a new School Teachers' Pay and Conditions Document will be prepared. There will then be opportunity to comment on the precise wording of the amendments prior to the publication of the new Document and the laying before Parliament of an Order which will give effect to its provisions.

7. The Interim Advisory Committee say that they hope it will be possible for a copy of the report to be seen by teachers in every maintained school. Enough copies of the report are being sent to each local education authority for a copy to be circulated in each school. BACKGROUND AND PROPOSED PROGRAMME

As the Cabinet recognised a year ago (CC(88) 9th Meeting), the present session's programme is at the limits of what can be managed, and this very heavy programme is bound to have a knock-on effect on the starting date for the next session. It is essential, however, that we plan for the fourth (1990-91) session of this Parliament to begin at the conventional time. Next session's programme must be constructed with both these pressures in mind. We must also recognise that there are some necessary Bills which would not be suitable for a fourth or fifth session of the Parliament and which therefore have a strong claim on next session's programme. Equally, there are other Bills that would be perfectly suitable for the later session and could be deferred with that in mind.

2. Taking all these considerations into account, The Queen's Speech and Future Legislation Committee (QL) has been through the usual process of consultation with colleagues and now proposes the programme set out at Annex A. The main elements of the proposed programme, which has a very different character from those of recent years, are the Broadcasting Bill, the Courts and Legal Services Bill, the Human Rights Bill, the Environmental Protection Bill, the Health Services Bill, and the Human Fertilisation and Embryology (Control) Bill. The programme contains several Bills which would be controversial and will consume a good deal of time in both Houses. One particular difficulty is that amendments to the abortion law are likely to be within the scope of the Human Fertilisation and Embryology (Control) Bill, and this is bound to complicate the Bill's passage.

3. The programme which QL recommend is again at the limits of what can be delivered in the session, and there is no contingency margin for unforeseeable extras. Once again I must ask colleagues to accept that any significant additions to the programme would need to be offset by matching reductions. BILLS NOT RECOMMENDED FOR INCLUSION

4. A list of the Bills which QL decided not to include in the recommended programme is at Annex B. As usual, the list contains a number of attractive bids, and I particularly draw the Cabinet's attention to the arguments which were put to QL in favour of the following:

(a) Town and Country Planning Bill

This Bill would provide for changes to land compensation arrangements, which would be of help in connection with major infrastructure projects such as the channel tunnel rail link; changes to development plans, which were the subject of a White Paper published last month; charging for appeals, which should help to reduce the backlog of planning applications and appeals; and, subject to colleagues' policy agreement, measures on planning enforcement, which is a subject on which there is widespread public concern. There is clearly a strong case for proceeding quickly with this Bill, but planning law is a politically lively issue and, although the Bill would probably be no more than 30-40 clauses, it would undoubtedly take up a good deal of Parliamentary time.

(b) Open Markets Bill

The Secretary of State for Trade and Industry has indicated that, in order to assist QL, he would be prepared to trim this to a Bill containing 50 clauses on restrictive trade practices and, if there was room, a further 30-40 clauses on consumer credit. Both the Secretary of State for Trade and Industry and the Chancellor of the Exchequer emphasised that legislation on restrictive trade practices is an important element of the Government's policy of increasing competition and promoting enterprise. The policy proposals were set out in a Green Paper published last year. Provided that the Bill were introduced next session it could provide a very helpful background for the Lord Chancellor's Bill on the reform of legal services, and the corresponding Scottish measure. Legislation on consumer credit, which is also of a deregulatory nature, would be welcome in view of current concerns about credit practices.

(c) Road Traffic Bill

The Secretary of State for Transport has indicated that he would be prepared to trim this Bill to a 70 clause measure to implement the North Review of Road Traffic Law, together with some miscellaneous amendments to the Road Traffic Act. The White Paper setting out the Government's response to the North Review, which was published last month, has been extremely well received. The reform of road traffic law is widely seen to be overdue and legislation would be welcomed on all sides. The Secretary of State for Transport is concerned that the Government would be criticised for delay and would lose the initiative if legislation were not brought in at the first opportunity. We might also be faced with a number of Private Members' Bills next session, seeking to legislate on elements of our own White Paper proposals. In each of these cases, QL recognised that there were powerful arguments for proceeding in the 1989-90 Session, but were simply unable to find room in the programme. QL considered that all three Bills would be suitable for a fourth Session.

PREPARATION AND HANDLING OF BILLS

As usual, I must invite colleagues to take a particular interest in ensuring the timely preparation of Bills for which they are responsible. I appreciate the great efforts that were made to have most of our major Bills ready at the beginning of the present session, and it is essential that we repeat that performance this year as it provides the foundation for managing the whole session's business. The management of the programme also depends on a reasonable number of weighty Bills being introduced in the House of Lords. The Lord Privy Seal and I will once again be looking to colleagues to cooperate with us in making the necessary choices.

CONCLUSION

6. I invite the House:

(a) to approve the list of Bills at Annex A as the provisional legislative programme for next session, on which preparatory work should now be put in hand;

(b) to endorse the comments in paragraph 5 above about the preparation and handling of Bills.

J W

Privy Council Office

7 March 1989 ANNEX A

BILLS RECOMMENDED FOR INCLUSION IN 1989/90 PROGRAMME

ESSENTIAL

DTp Civil Aviation Authority (Borrowing Limits) very short

To increase the ceiling on aggregate borrowing by the Civil Aviation Authority.

CONTINGENT

DEN Coal Industry short

To increase the statutory limit on restructuring grants payable to the British Coal Corporation (BCC) and/or to change BCC's capital.

FCO Fiji short

To make provision consequent upon Fiji's possible departure from the Commonwealth.

FCO Pakistan short

To make provision consequent upon Pakistan's possible readmission to the Commonwealth.

PROGRAMME WITH ESSENTIAL ELEMENTS

HO Broadcasting long (150-200 clauses)

To implement the broadcasting White Paper (including reorganization of independent television (essential)); to reform commercial radio; to strengthen provisions on broadcasting standards; and miscellaneous other measures.

LCD Courts and Legal Services long (c 70 clauses)

To make reforms in the organisation of the legal professions and in the civil justice system; to bring judicial pensions into line with the requirements of the Social Security Acts 1985 and 1986 (essential); and miscellaneous other measures. HMT Pensions (Miscellaneous Provisions) short

To provide for pensions increase for widowers in accordance with EC requirements (essential); and to score the cost of pensions increase in teachers' and NHS' notional funds.

PROGRAMME

MAFF Food long (c 100 clauses)

To replace the Food Acts for England and Wales and for Scotland with a comprehensive and modernized GB Act.

DES Teachers' Pay and Conditions short

To establish a permanent statutory framework for determining teachers' pay.

DES Student Support short

To establish the Secretary of State's powers to secure the provision of loans to students in higher education in England, Wales and Scotland.

DEmp Employment (excluding tourism provisions) medium

To make further reforms of trade union law; and to abolish the Wages Council system.

DOE Environmental Protection long (c 100 clauses)

To provide for various improvements in environmental protection legislation including the introduction of an integrated system of control over industrial pollution and reform of the law on waste disposal.

DOE Crown Suppliers very short

To facilitate the privatisation of the Crown Suppliers.

DH Health Services long

To implement the White Paper on the reform of the National Health Service. DH Human Fertilisation and Embryology (Control) substantial (40-50 clauses)

To implement the White Paper on Human Fertilisation and Embryology arising in part from the Warnock Report.

HO Mutual Assistance substantial

To enable the UK to join in international arrangements for mutual legal assistance.

HO Representation of the People short

To reform the law on voting for British citizens resident overseas; and to simplify the law on absent voting for those who move house.

SO Scottish Enterprise and New Towns (Scotland) long

To establish Scottish Enterprise to replace the Scottish Development Agency and the Training Agency in Scotland; to provide powers to reconstruct development corporations' liabilities; and to extend powers for winding up development corporations.

SO Law Reform (Miscellaneous Provisions) (Scotland) long (c 50 clauses)

To reform restrictive practices in the legal professions in Scotland; and to make miscellaneous improvements to Scottish administration of justice and criminal law.

DSS Social Security substantial (c 30 clauses)

To make further reforms to social security legislation.

DTI Export Credit and Investment Guarantees medium (c 15 clauses)

To enable the Export Credit Guarantees Department to take advantage of capital market developments.

DTp Highways and Transport (Private Finance) substantial (excluding non-highways provisions)

To establish new procedures for authorising privately financed roads; and to amend the Highways Act and the Public Utilities Street Works Act. DTp Aviation and Marine Security short To provide for prosecution or extradition in respect of terrorist acts against ships, offshore platforms and at airports; and to tighten powers relating to airport, ferry and port security.

HMT Government Trading Funds short To widen powers for Next Steps Agencies to be taken out of the Vote accounting system.

HMT Parliamentary Pensions short To introduce new pensions arrangements for the Prime Minister, Speaker and Lord Chancellor; and to provide for severance pay for House of Commons Ministers.

UNCONTROVERSIAL

MOD Greenwich Hospital very short To remove constraints on the admission of pupils to the Royal Hospital School.

FCO Protocols Additional to the Geneva Conventions very short To enable the UK to ratify additional protocols to the Geneva Conventions.

LCD Contracts medium To enable the UK to ratify the 1980 Rome Convention on the law on contractual relations. ANNEX B

BILLS NOT RECOMMENDED FOR INCLUSION IN 1989/90 PROGRAMME

PROGRAMME

MAFF Agricultural Marketing short To abolish the potato and wool price support regimes and possibly to amend the potato marketing scheme.

MAFF Slaughterhouses medium To extend the Slaughterhouses Act 1974 to farmed deer and rabbits; to strengthen welfare controls on slaughtering; and to provide for recovery of Government costs for inspecting pig slaughterhouses.

MAFF Agriculture Capital Grants (Expenditure Management) very short To facilitate transfer of provision for farm capital grants to a cash limited Vote.

MAFF Forestry very short To increase the maximum membership of forestry regional advisory committees.

MOD Defence Research Agency short To facilitate possible formation of MOD's research establishments into a Government owned plc.

DE Employment (tourism provisions only) very short To reorganize arrangements for promoting tourism.

DES Research Councils Reorganisation short To merge various Research Councils.

DOE Town and Country Planning substantial (30-40 clauses) To provide for changes to land compensation arrangements; reform of development plan system; charging for appeals; and measures on planning enforcement. DOE Commons

To provide for more effective management of, and improved access to, common land.

FCO Diplomatic and Consular Premises (Disturbances)

To control demonstrations which disturb Embassies and Consulates.

FCO China Indemnity (Application)

To wind up the affairs of the Chinese Government Purchasing Commission and to provide for the application of its remaining funds.

DH Registration Services

To modernise Registration Service procedures.

HO Criminal Justice (except mutual assistance provisions)

To make improved provision for punishment in the community; to reform the law on parole; to withdraw the right to jury trial for minor theft; to reform the law on the right of silence; and to make provision for private sector involvement in the remand system.

HO Summer Time

To coordinate time with other EC countries and allow more summer time in the UK.

HO Shops

To relax restrictions on Sunday trading.

LCD Commonhold and Land Obligations

To facilitate the transfer and management of interdependent properties.

OAL Museums and Galleries

To regularise the funding status of National Museums and Galleries; to grant corporate status to the trustees of certain galleries and to enable them to dispose of objects in their collections. DTI Open Markets long (c 110 clauses)

To reform the law on restrictive practices; consumer credit; weights and measures; the sale and supply of goods; and statistics of trade.

DTI Privatisation substantial (Miscellaneous Provisions) (30-40 clauses)

To facilitate the privatisation of the National Engineering Laboratory and the British Technology Group; and to reorganise British Shipbuilders into a residuary body.

DTP Road Traffic long (c 130 clauses)

To reform road traffic legislation in the light of the North Review; to make miscellaneous other reforms to traffic law; and to ease statutory requirements on operators of goods vehicles.

DTP Highways and Transport substantial Private Finance (non-highways provisions)

To compel local authorities to privatise their bus companies and to complete the conversion of the ports to a private sector industry.

UNCONTROVERSIAL

LCD Civil Jurisdiction and Judgements medium

To give effect to the Lugano Convention on civil jurisdiction and the recognition and enforcement of judgements.